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Inamed Goes With Allergan

Inamed (IMDC) has agreed to be acquired by Allergan (AGN), but one divestiture designed to make the deal more palatable to regulators could attract several bidders.

Botox-maker Allergan said Tuesday night that it had signed a definitive agreement to buy Inamed, a maker of breast implants and dermatology treatments. Allergan made its offer last month , topping an earlier $2.8 billion bid from Medicis (MRX) of Scottsdale, Ariz.

Once Medicis decided to drop out of the bidding, it withdrew its agreement to buy Inamed, Santa Barbara, Calif., and received a $90 million break-up fee.

The value of the Allergan offer, now estimated at $3.4 billion, keeps changing because the company is offering $84 in cash or 0.8498 shares for each share of Inamed. Initially, the stock swap also was worth $84 a share, but Allergan's stock has since moved up. On Wednesday, the exchange rate made it worth just above $90.

The companies agreed that 45% of the Inamed shares tendered will be exchanged for cash and 55% will be exchanged for Allergan shares. Allergan's exchange offer started last month and will continue through Jan. 9.

The deal must be approved by the Federal Trade Commission. "We continue to work with the appropriate regulatory authorities as they review the transaction, and do not anticipate that the regulatory process will lead to any material delay in the closing of the transaction," Nicholas L. Teti, Inamed's chairman and CEO of Inamed, said.

To improve its chances with the FTC, Inamed agreed to cancel its license to the experimental dermatology product Reloxin, which is similar to Botox. Assuming the Allergan-Inamed deal is approved, rights to Reloxin will revert back to its developer, the French drug company Ipsen Ltd. Ipsen will pay Inamed $10 million.

Since Ipsen licensed the Reloxin rights in mid-2002, Inamed has been developing the drug to compete with Botox in the U.S., Canada and Japan. Until the Allergan-Inamed deal is closed, Inamed will be responsible for late-stage clinical trials and preparing data that will be submitted to the Food and Drug Administration. Ipsen said Wednesday it expects to seek FDA approval for Reloxin in 2007.

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