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Allergan’s share price (NYSE:AGN) opened slightly higher today following the release of its third quarter results for the period ending 30 September. Shares closed on Friday at $184.21, opening this morning at $186.80, which, so far, has been its high point for the day. This may be more due to the takeover bid from Valeant Pharmaceuticals (TSX:VRX) that Allergan has been dominating pharmaceutical M&A headlines as it makes an all-out effort to convince shareholders to resist the offer like it was the Ebola virus.
AGN handily beat analyst expectations that averaged $1.62 per share by delivering a performance that parsed out to $1.78 per share. Total revenue of $1.82 billion surpassed the forecasts of $1.77 billion by nearly 3%.
Allergan’s share price has a 52-week low of 88.34, but it has been above 100.00 for all of 2014 and above 150.00 since April. The Valeant takeover bid had been roughly $179.00 per share in a combination of $72.00 cash per share and the balance in Valeant shares.
It doesn’t take a financial expert to see that Valeant’s offer just isn’t good enough. Even Valeant has figured it out, because now it says it is willing to raise its offer to $200.00 per share. That’s still slightly less than a 10% premium per share. What is more, Allergan’s estimate for the fourth quarter is an undiluted EPS of $1.80 to $1.83 per share and analysts are estimating the share price will rise to a high of $230.00, with a mean of $206.84 and a median of $208.50.
Valeant’s offer is looking worse by the minute.
David E.I. Pyott, Allergan Chairman and CEO noted in the quarterly update that, “With continuing strong momentum across a broad range of products, Allergan again recorded the strongest increase in absolute dollar sales in any quarter in our history, and again delivered sales and earnings per share growth above the high end of our expectations.”
He added that, “We are making excellent progress on the stockholder value enhancements announced in July 2014, which are resulting in enhanced non-GAAP diluted earnings per share growth and thus increased stockholder value.”
Do you see what I mean? In the minute it took to write those last two paragraphs, Valeant’s offer looks worse than it did a minute ago. It looks really bad when you add in the fact that Allergan file a lawsuit against Valeant that alleged that VRX, et.al., “violated federal securities laws prohibiting insider trading, engaged in other fraudulent practices, and failed to disclose legally required information,” in their tactics to promote their takeover bid. While an investigation is ongoing, and expected to be rather lengthy, Allergan has agreed to hold a special meeting on Thursday of this week, 30 October, to allow shareholders to vote on the matter.
Allergan’s pharmaceutical sales increased by 14.3% and its medical devices sales increase 30.4% during the quarter.
I don’t often make predictions, but I’m going to break with tradition today and say that the outcome of Thursday’s shareholder vote will be “Valiant effort Valeant. Now go away. We are doing just fine without you.”
