Allergan on Monday advised investors not to sell their shares to Valeant Pharmaceuticals International, which launched a hostile takeover offer for the California-based Botox maker last week, saying it was "grossly inadequate."
The recommendation was consistent with Allergan's previous rejections of Valeant's $52 billion cash and stock offer. The Canadian company and activist investor William Ackman, who owns nearly a 10 percent stake in Allergan, made a joint bid to acquire the company in April.
Allergan said in a statement that because of Valeant's declining share price, the offer is now worth about $173.20 per share, down from the $179.25 per share it reached on May 30.
It said that the offer undervalues its "industry-leading position, financial performance, strong balance sheet, exceptional management and growth prospects." Allergan reiterated its goal to increase adjusted earnings by 20 to 25 cents per share and generate $14 billion in free cash flow in the next five years.
Valeant on Monday posted on its website an eight-page rebuttal to earlier criticism by Allergan, defending its acquisition strategy, organic growth and performance of its key products.
"Allergan's rejection of Valeant's proposal is based on beliefs and assumptions about our business that are not supported by the facts," Valeant spokeswoman Laurie Little said in a separate statement. "We are moving forward with our exchange offer and remain committed to this value-creating transaction."
Valeant and Allergan shares dipped in New York by 0.6 percent and 0.3 percent respectively, in early trading. Valeant stock has fallen about 11.5 percent since making its initial offer for Allergan on April 22.