Inamed ( IMDC) said Wednesday it will consider a buyout bid from Allergan ( AGN) that exceeds an earlier offer for the cosmetic-products company Medicis Pharmaceutical ( MRX).

By deciding to review the unsolicited offer from Allergan, Inamed's board extends the less-than-smooth takeover process that started in March when Medicis made its bid for Santa Barbara, Calif., company.

Along the way, the Medicis-Inamed deal has been stalled because the Federal Trade Commission asked for more information in May about potential antitrust issues. Recently, one of Inamed's largest shareholders complained that the price offered by Medicis, based in Scottsdale, Ariz., was inadequate.

The Allergan offer is worth $84 a share, or $3.2 billion. The Medicis proposal was worth $75 a share, or $2.8 billion, at first, but that was before the competing bid was announced. After Allergan made its intentions known, Medicis' shares sank, dropping the value of its offer to the equivalent of about $68 a share. Allergan's offer is for $84 in cash, or 0.8498 of a share for each Inamed share. The Medicis bid is $30 in cash plus 1.4205 of its shares for each share of Inamed.

Inamed said the Allergan proposal "is reasonably likely" to trigger a provision in its agreement with Medicis that requires Inamed's board to consider a "superior proposal."

"Your stockholders will have the opportunity to realize greater long-term value as a result of the truly unique attributes of an Allergan-Inamed combination," said a Nov. 14 letter from David E. I. Pyott, chairman and CEO of Allergan, to Nicholas L. Teti, chairman and CEO of Inamed.

Strategic Maneuver

Inamed has gained most of its recent headlines for its efforts to convince the Food and Drug Administration to approve silicone gel breast implants in cosmetic surgery, but many analysts say the key to Allergan's bid is the target company's skin-care products. They say Allergan is trying to ensure the strength of its skin-treatment business, which includes Botox, by seeing that Medicis doesn't take over Inamed. Allergan's other main business is eye-care products.

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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