In a move to strengthen its acquisition offer for Allergan (AGN), Valeant Pharmaceuticals International, Inc. (VRX) announced that it has sent a letter to the former providing an update on its expected third-quarter results. The letter also reinstates Valeant's intent to negotiate a mutually agreeable transaction with Allergan.
However, Allergan continues to believe that Valeant’s offer substantially undervalues the company, creates significant risks and uncertainties for the stockholders of Allergan, and thus, is not in the best interests of the company and its shareholders.
In response to Allergan’s allegation that Valeant’s third-quarter results will reveal the weakness of true organic growth, Valeant has stated that it expects third-quarter revenues to exceed the guidance provided by the company in the second quarter earnings call.
Valeant expects its same store organic growth to exceed 15% driven by double-digit growth across almost all of its major businesses and geographies. Moreover, Valeant expects Bausch + Lomb to continue delivering same store organic growth of over 10%.
Moreover, the company expects the strong double-digit same store organic growth to continue through the fourth quarter.
We note that Valeant has been relentlessly pursuing Allergan since Apr 2014. On Jun 18, 2014, Valeant announced that it commenced an exchange offer for the common stock of Allergan, Inc. after the latter rejected its previous offer a couple of times. Allergan plans to hold a special meeting of its stockholders on Dec 18, 2014.
Allergan currently carries a Zacks Rank #3 (Hold) while Valeant has a Zacks Rank #5 (Strong Sell). We expect investor focus to remain on further updates from the proposed acquisition.
Investors interested in the health care sector can consider stocks like Johnson & Johnson (JNJ) and Bristol-Myers Squibb (BMY). Both carry a Zacks Rank #2 (Buy).
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