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Valeant raises cash-stock offer for Allergan

By WTOP Staff

TOM MURPHY
AP Business Writer

Valeant Pharmaceuticals has pumped more cash into its bid for Botox maker Allergan, and it also defended its business model on Wednesday, a day after its reluctant acquisition target aired more concerns about a deal.

The Canadian drugmaker said it will now offer $58.30 and a portion of its stock for each Allergan share. The revised bid could be worth more than $50 billion, based on Tuesday’s closing price for U.S.-traded shares of Valeant. But it still may not be enough to get Allergan to the negotiating table, analysts say.

Valeant Pharmaceuticals International Inc. also threw in a contingent value right worth up to $25 per share and based on future sales of a potential eye treatment.

Valeant raised the cash portion of its offer by $10 from a previous bid of $48.30 per share. That was part of an unsolicited offer rejected by Allergan that was worth nearly $46 billion when Valeant announced it last month.

Allergan Inc. said in a brief statement Wednesday that it would carefully review the new proposal.

Valeant Chairman and CEO J. Michael Pearson told investors in a Wednesday morning webcast that he had talked to many Allergan stock owners “and the real message we continually got back is Allergan shareholders want this deal to occur, but they wanted a higher price.”

That price still may not be high enough for investors. Shares of both companies fell Wednesday while broader trading indexes were largely flat.

The latest bid totals about $166 in cash and stock for each Allergan share, and shareholders may be looking for something in the $180 range, Credit Suisse analyst Dr. Vamil Divan said in a research note.

Allergan, which also makes the dry eye treatment Restasis, has said repeatedly that it opposes a deal with Valeant. Shortly after Valeant made its offer public, Allergan announced a so-called poison pill plan, a defensive tactic that makes a buyout prohibitively expensive. Earlier this month, Allergan said that Valeant’s uncertain long-term growth prospects and business model create a risk for Allergan shareholders, given the stock component of the offer.

On Tuesday, it questioned Valeant’s ability to deliver organic growth, which doesn’t count gains through acquisition. It also said in a statement that the Canadian drugmaker has limited experience with “large, global scale products” and would cut research and development costs too much.

Citi analyst Liav Abraham said in a research note that said she doesn’t expect the latest Valeant offer to bring Allergan to the negotiating table for a friendly transaction. She has low expectations for the eye treatment involved in the contingent value right, and she predicts that Valeant will take its bid hostile and go directly to Allergan shareholders after the company rejects the latest overture.

Valeant made its initial bid along with activist investor Bill Ackman. The investor’s Pershing Square Capital Management LP holds a 9.7 percent stake in Allergan. Pershing had agreed to take only stock if the deal went through and would remain as a long-term shareholder of the combined company.

Valeant Chairman and CEO J. Michael Pearson said Wednesday in a letter to his Allergan counterpart, David Pyott, that the two sides should meet.

“It appears based on Allergan’s recent public statements that you have a fundamental misunderstanding of our business model and its performance,” Pearson wrote.

Valeant also said that Allergan’s analysis of its business “was full of errors,” and its operating model would speed up growth for Allergan products, especially in developing markets.

Pearson also touted the performance of several Valeant executives during his presentation to investors, although he acknowledged he couldn’t pronounce some of their last names.

Separately, Nestle said Wednesday that it will pay $1.4 billion in cash to Valeant for the rights to sell lip and wrinkle treatment Restylane and other skin products in the U.S. and Canada.

Valeant completed an $8.7 billion acquisition of contact lens maker Bausch + Lomb last year. Its latest deal comes amid a surge of pharmaceutical bids, as drugmakers seek to grow or ditch assets that aren’t central to their business.

The Valeant-Allergan saga is one of several multibillion-dollar acquisition stories the drug industry has seen so far this year.

British drugmaker AstraZeneca rejected several takeover offers from U.S. counterpart Pfizer, the latest being a nearly $119 billion deal that would have amounted to the richest acquisition ever among drugmakers. Switzerland’s Novartis AG has agreed to buy GlaxoSmithKline’s cancer-drug business for up to $16 billion, while selling most of its vaccines business to GSK for $7.1 billion, plus royalties.

Shares of Irvine, California-based Allergan fell 4.4 percent, or $7.27, to $157.75 Wednesday afternoon, and U.S.-traded shares of Valeant dropped $1.95 to $128.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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