Grp_3_SM.pdf - Valeantu2019s Battle for Allergan Group 3...

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Valeant’s +attle for '*llergan 0roup ° +ibaswan +asu± Ph-²³´²µ¶²2S -eevan -ohn Varghese±Ph-²³´²³°²O Shaaqib 0ansuri± P0P²·´²³³·
³¸ What do you make of '*llergan’s reluctance to talk to Valeant%( Would there be any harm in talking to the potential suitor%( Ɣ Valeant is a company which uses the inorganic model of growth Ɣ '*llergan has a rich culture of research and development and follows the organic model of growth Ɣ 2ts R¹- engine has generated numerous innovative products Ɣ 2t has grown from a small eye±care company to a major pharmaceutical and medical device company Ɣ +y acquiring '*llerganº Valeant will have an R¹- engine of its own Ɣ Pearson was known for cutting costs and introducing extreme capital discipline in businesses and believed that by cutting unnecessary costs in '*llerganº he can increase the value for its shareholders Ɣ 1e also wanted to acquire the specialty pharmaceuticals segment which consisted of products which were high±costº high±complexity and high±touch which were not in the product mix of Valeant»
·¸ What do you make of '*llergan’s reluctance to talk to Valeant%( Would there be any harm in talking to the potential suitor%( Ɣ Valeant proposed multiple offers to '*llerganº each better than the previous one» Ɣ On ·³st '*pril ·µ³´º Valeant made a public offer to '*llergan’s leadership team to merge the two companies» Ɣ Valeant proposed exchanging ¼´½»°µ in cash plus µ»½° shares of Valeant ¾at ¼³·¿²share that day¸ for each share of '*llerganº a total value of ¼³À·»½½ per share» This was a premium of °³Á over '*llergan’s stock price of ¼³³¿»¿° on ³µth '*pril Ɣ On ·½th 0ayº Valeant increased the cash component of its offer by ¼³µ per shareº from ¼´½»°µ to ¼À½»°µ per share» This increased the total offer to ¼³¿¿»³¿ per shareº ¼À½»°µ in cash and µ»½° shares of Valeant trading at ¼³·¿» "À per share» Ɣ On · "th 0ayº +ill '*ckman concluded that if the offer price was raised to an effective of ¼³½µ per share then the offer would receive support Ɣ On °µth 0ayº Valeant increased the offer once more» The cash component was increased from ¼À½»°µ to ¼¶· per share» Valeant’s share price had closed at ¼³· "»·· the previous dayº making the effective offer

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