Valeant says may raise Allergan bid; beats on profit

A drop of Allergan Inc. Botox is seen on the tip of a needle before being administered by Dr. Keith A. Marcus to a patient at the offices of Marcus Facial Plastic Surgery in Redondo Beach, California, U.S., on Tuesday, April 22, 2014.
Patrick T. Fallon | Getty Images
A drop of Allergan Inc. Botox is seen on the tip of a needle before being administered by Dr. Keith A. Marcus to a patient at the offices of Marcus Facial Plastic Surgery in Redondo Beach, California, U.S., on Tuesday, April 22, 2014.

Valeant Pharmaceuticals International said on Monday that it may raise its bid for Botox maker Allergan after the Canadian company posted a better-than-expected quarterly profit.

Valeant CEO Michael Pearson said a possible revised stock and cash bid would be worth more than $200 per share, assuming that Valeant's stock rises, and would include more cash. The current bid is worth about $52.7 billion or $176 per share.

Shares of Laval, Quebec-based Valeant were up 3 percent at C$139.51 in Toronto on Monday. Allergan stock was up 1.7 percent at $180.45.

Valeant's third-quarter results were keenly anticipated for their potential impact on Valeant's bid for Allergan, maker of anti-wrinkle injection Botox. Unlike most quarters in which, according to critics, one-time charges related to acquisitions obscure Valeant's performance, the company made few deals as it stalked Allergan.

"When people have time to reflect on our performance this quarter, it hopefully goes a long way of convincing the Allergan shareholders that our currency is actually a great stock to own," Pearson told Reuters.

He said Valeant is considering adding more cash to its bid, and could make a decision on it at any time.

"We have some money in our pocket," he said.

Pearson expects that once it becomes clear Valeant will win Allergan, Valeant's stock will rise, adding further value to the bid.

Valeant teamed up with activist investor Bill Ackman in April to make a hostile offer for Allergan, which rejected Valeant's offer. Allergan did not immediately respond to Pearson's comments.

Allergan will hold a special shareholder meeting on Dec. 18, when Ackman hopes to remove most directors, possibly leading to negotiations with Valeant.

Valeant's relationship with Ackman and his Pershing Square Capital Management hedge fund is not strained as some have speculated, Pearson said.

"We're completely aligned," he said on an earlier call with analysts.

The company raised its full-year adjusted earnings forecast to $8.22-$8.32 per share from $7.90-$8.10 per share.

The company raised its fourth-quarter adjusted profit forecast to $2.45-$2.55 per share on expectations of double-digit same-store organic growth.

Analysts on average were expecting the company to earn $8.03 per share for the full year and $2.38 per share for the fourth quarter, according to Thomson Reuters I/B/E/S.

Valeant also raised its 2015 adjusted profit forecast to $10 per share from $9.65 per share. Analysts were expecting $9.58 per share.

Valeant posted a profit attributable to the company of $275.4 million, or 81 cents per share, in the third quarter, compared with a loss of $973.2 million, or $2.92 per share, a year earlier.

Cash earnings, or profit adjusted for one-time items, was $2.11 per share, above the average analyst estimate of $1.99 per share.

Revenue jumped 33 percent to $2.06 billion, matching analysts' expectations.