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Medicis Takes Firm Line

The battle for cosmetic drug-and-device supremacy got uglier Tuesday when Medicis (MRX) told the board of Inamed (IMDC) to formally reject another company's competing takeover bid or face the monetary consequences.

Medicis proposed a takeover of Inamed in March, but last week Allergan (AGN - Get Report) made a bid that Inamed's board said it would consider because it appears to be superior.

Allergan is offering $84 in cash or 0.8498 shares for each share of Inamed. Medicis has offered $30 in cash plus 1.4205 shares of its stock for each share of Inamed. On the basis of Monday's closing price of Medicis, the offer is worth about $74.85 a share.

Medicis' stock price was aided when yet another cosmetic products company, Mentor (MNT), made an unsolicited takeover bid worth $2.2 billion. Medicis' board rejected the stock-swap offer as inadequate.

Medicis has said for several days that its offer is better in the long run, and the company was more emphatic Tuesday, warning board members of Inamed that they must reject Allergan's offer by Dec. 6. Otherwise, Medicis has the right to cancel its offer and receive a $90 million termination fee, according to the terms of their agreement.

Even though Inamed's board hasn't formally responded to Allergan's bid, Allergan on Monday started its exchange offer for Inamed's shares. Allergan said the companies have signed a confidentiality agreement and will be sharing nonpublic financial information.

The Allergan exchange offer expires Dec. 20, one day after Medicis shareholders are scheduled to vote on their company's proposed takeover of Inamed. The Federal Trade Commission is expected to rule on the Medicis-Inamed proposal by Dec. 14.

By midmorning, shares of Medicis were up 16 cents to $31.73, while Inamed was off 26 cents to $83.07. Allergan lost 57 cents to $99.03, and Mentor's stock slipped 28 cents to $51.07.

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