Botox maker Allergan (NYSE:AGN) turned down an unsolicited $46 billion bid from Valeant Pharmaceuticals (NYSE:VRX), which vowed to continue its pursuit of a deal.
Allergan said Monday it believes the proposal undervalues the company, and raised concerns over the deal’s large stock component. In a letter sent to Valeant, Allergan suggested the Canadian drug maker’s business model “is not sustainable.”
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The company also said it is already on track for 20% to 25% growth in earnings per share in 2015, as well as continued double-digit revenue growth. Wall Street analysts are forecasting earnings and revenue to increase 17% and 9%, respectively.
“We are confident in our ability to extend our track record, enthusiastic about the opportunities before us, and believe Allergan is well positioned to deliver compelling value to our stockholders,” chairman and CEO David E.I. Pyott said in a statement.
Valeant’s effort to acquire Allergan is backed by activist investor Bill Ackman’s Pershing Square Capital Management. Their bid was disclosed late last month.
Allergan had been expected to reject the deal after adopting a poison pill defense, which is intended to prevent investors from building up a large stake in the company. In April, Ackman said he owned 9.7% of Allergan.
Valeant, which owns Bausch & Lomb, recently said it would seek a special meeting to shake up Allergan’s board.
“We are disappointed that Allergan has rejected our value-creating offer without engaging in any substantive discussions with Valeant or Allergan's largest stockholder, Pershing Square, and we remain committed to pursuing this transaction,” said Valeant spokesperson Laurie Little.
Pershing Square declined to comment.
Valeant shares fell 1.2% to $129.54 in recent trading. Allergan was down 1% at $159.65.