The battle for Botox maker Allergan took a new twist on Wednesday when Canadian drugs firm Valeant sold off its skin fillers business, giving it the firepower to raise its offer to nearly $50bn (£36.6bn).
Valeant raised $1.4bn by selling the North American rights to a range of cosmetic and medical skin fillers to Nestlé, the Swiss firm famous for Nescafé and KitKats, and immediately put the money into its offer for Allergan, raising its bid to $49.4bn.
The Californian firm had rejected the previous surprise $47bn offer from Valeant and activist investor Bill Ackman made on 22 April.
The latest move comes a day after Allergan went on the offensive and sought to discredit Valeant by raising questions about its business model and the true value of its stock.
The Canadian drugmaker, known for skincare products and generic drugs, raised the cash component of its offer for Allergan by $10 to $58.30 a share. The stock component remained 0.83 of a Valeant share for each Allergan share. This values Allergan at $166.16 a share, up from $153 a share. This is still less than the $180-$200 a share investors are looking for, according to Reuters.
The battle for Allergan started to heat up just as AstraZeneca managed to fend off an unwelcome bid from New York-based Viagra maker Pfizer, which walked away on Monday – but could return in six months' time.
Nestlé, for its part, decided to dip its toes deeper into healthcare in February by taking over the Galderma dermatology joint venture it had with L'Oréal, and hinted at the time that more deals would follow, as its main food business struggles. Galderma will form the basis of a new division known as Nestlé Skin Health, with brands ranging from prescription drugs to over-the-counter soaps and sunscreen.
Nestlé, the world's biggest food company, is acquiring from Valeant the rights in the US and Canada to sell Restylane, Perlane and Emervel, which are injectable gels used to smooth away facial wrinkles or plump up lips, and Dysport, an injectable wrinkle relaxer similar to Botox. It will also get rights to Sculptra, an anti-ageing facial injection that replaces lost collagen, for cosmetic and medical use. Galderma already sells these products outside the US and Canada.
Nestlé's foray into healthcare comes after it posted its worst first-quarter sales performance since 2009 amid pricing pressure in Europe and slowing growth in emerging markets.
The Swiss group's chairman Peter Brabeck-Letmathe said the deal had given Nestlé strategic assets to extend its activities in specialised, medical skin treatments. "This move will reinforce Galderma's leading position in the industry when it becomes Nestlé Skin Health by allowing it to complete its geographic footprint for its strong portfolio of brands and leading medical solutions globally."
