June 26 (Bloomberg) -- Seven U.S. senators are asking federal regulators to review the potential impact of a hostile takeover by Valeant Pharmaceuticals International Inc. of California-based Allergan Inc., the maker of Botox.
Allergan’s board has rejected a $54 billion tender offer from Valeant, which is based in Laval, Quebec. The Democratic senators wrote to the Federal Trade Commission and the Department of Justice on June 25, asking whether the deal might reduce both competition and research in certain markets. They also questioned the possible effect on drug prices. The signers included Diane Feinstein of California, Christopher Coons of Delaware and Robert Menendez of New Jersey.
The letter cited “a growing trend in the pharmaceutical industry whereby companies make acquisitions, eliminate drug pipelines, slash R&D budgets, and arbitrage location headquarters in order to lower effective tax rates.”
In battling the takeover, Allergan has said Valeant’s offers undervalue the U.S. company.
Valeant has raised its bid twice, before making the tender offer. It is joined in its bid by Bill Ackman’s hedge fund, Pershing Square Capital Management LP., which owns 9.7 percent of Allergan’s shares and seeks to oust Allergan directors in a special meeting they are planning to hold before the year ends.
Allergan shares rose less than 1 percent to $169.78 at 10:35 a.m. in New York time. Valeant shares rose 1 percent to $127.24.