Updated from 9:01 a.m. ET to include Valeant statement, analyst comments
NEW YORK (TheStreet) -- Allergan (AGN) has decided not to engage with Pershing Square's Bill Ackman and Valeant Pharmaceuticals (VRX) just two weeks after the hedge funder decided to fork over $600 million to investors as part of his takeover effort.
The botox-treatment specialist said on Tuesday its board has unanimously rejected Ackman and Valeant's takeover offer, which included 0.83 of Valeant common shares, $72.00 in cash per share of common stock and a contingent value right related to DARPin sales.
"Valeant's revised proposal substantially undervalues Allergan, creates significant risks and uncertainties for Allergan's stockholders and does not reflect the Company's financial strength, future revenue and earnings growth or industry-leading R&D," David E.I. Pyott, Allergan's chairman of the board and chief executive officer, said in a Tuesday statement.
Pyott also said he believes investors are confident in Allergan's growth prospects and are willing to continue investing in the company as a standalone. On May 12, Allergan forecast it would generate double-digit sales growth and 20% compound earnings-per-share growth over the next five years, in addition to approximately $14 billion in additional free cash flow during that time span.
"The Board is confident that the Company will create significantly more value for stockholders than Valeant's proposal. We look forward to updating stockholders on or around the time of our second quarter earnings announcement," Pyott concluded.
In rejecting Ackman and Valeant's latest offer, Allergan reiterated its belief that Valeant's business model is unsustainable, has low organic growth, is over-leveraged, and relies too heavily upon acquisitions for growth.