Allergan Puts Medicis on the Defensive

Medicis and Inamed had expected their deal to close by the end of the year if they got the necessary approvals. Analysts point out that Medicis could receive a $90 million break-up fee if Inamed walks away.

Allergan, of Irvine, Calif., made its offer just as Medicis was answering questions from the FTC. In a Tuesday filing with the Securities and Exchange Commission, Medicis said it has certified to the agency that it provided "substantially all the information" that had been requested by the FTC.

The FTC review was cited by Allergan's Pyott in his appeal to Inamed's board members and shareholders, contending his company's offer could get cleared easier. To accelerate an FTC review, Pyott said Allergan would agree to immediately shed Inamed's license to Reloxin, a skin treatment similar to Botox. Inamed licensed Reloxin from France's Ipsen.

Allergan's bid "offers greater value to Inamed stockholders and has greater certainty of completion than the pending merger [with Medicis]," Pyott said, predicting the deal could be closed in January.

A Medicis spokeswoman said Wednesday that her company and Inamed have a "legally binding agreement." Medicis "remains confident that Inamed shareholders will see the superior value" of its offer, she said. "We remain fully committed to the deal." She declined to comment on whether Medicis might raise its bid.

The FTC review hasn't been the only impediment to Medicis' offer. The second-largest Inamed shareholder, S.A.C. Capital Advisors, asserted in a Nov. 4 letter to Inamed management that the proposal doesn't provide "full and fair value" to shareholders. S.A.C. owns 2.31 million shares, or 6.4% of Inamed's common stock.

"We see the merits of a potential merger based upon Inamed's strong pipeline and Medicis' distribution network," the firm said. "However, because we believe that Inamed's shareholders are not receiving a just proportion of the new company following the merger, we plan to vote against the [Medicis] merger as it is currently proposed."

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