Allergan rejects Valeant's takeover offer

Allergan rejected Valeant's takeover offer of $47 billion on Monday saying Valeant's cost cuts were extremely steep.

U.S. drug maker, Allergan said it believed business model of Valeant was unsustainable and due to this uncertainty regarding the long-term growth of the company, the offer was extremely risky.

Chief Executive Officer of Allergan, David Pyott said that Valeant's cost cuts of billions of dollars would hinder Allergan making growth which it might make by itself. He predicted 20% to 25% rise in EPS in 2015.

In April Valeant and investor Bill Ackman, who has about 10% stake in Allergan, made a cash and stock offer for Allergan.

Spokeswoman of Quebec-based Valeant, Laurie Little said that the company was saddened because Allergan has rejected the offer.

According to sources, Allergan, maker of popular anti-wrinkle treatment Botox has also been looking for other buyers like as Shire Plc.

Chief Executive Officer of Allergan, David Pyott said that he was observing the national discussion regarding firms which shift their tax bases abroad and that he expected amendments to U.S. tax rules.

VALEANT'S TRAJECTORY

In the last 2 years, Valeant has acquired about a half-dozen firms and is seeking to become one of the world's five largest drug companies.

Shortly after buying Medicis Pharmaceuticals Corp for $2.6 billion in 2012 Valeant acquired contact lens producer Bausch & Lomb last year for $8.7 billion. Valeant has grown by slashing expenditure and acquiring companies or proven products which will increase earnings.

Chief Financial Officer of Valeant last week said that administrative, general and selling expenses of Allergan were too much.