Medicis rebuffs Mentor's $2.2 billion merger offer, says it is committed to deal with Inamed

By E. Janene Geiss

Philadelphia, Nov. 21 - Mentor Corp. announced Monday that it made an unsolicited proposal Friday to acquire Medicis in a stock-for-stock deal valued at $2.2 billion - but on Sunday, Medicis' board promptly rejected the offer.

Mentor is offering 0.62 shares of its common stock per Medicis share.

But Medicis stated it is committed to its proposed merger with Inamed Corp. for $2.8 billion in cash and stock, according to a Medicis news release. That deal was carved out in March, but last week Allergan Inc. offered to buy Inamed for $3.2 billion, which its board instructed management to consider, according to a Medicis news release.

After Medicis' rejection, Mentor president and chief executive officer Joshua Levine said in a conference call Monday that the Medicis board may make a "significant" portion of the offer in cash to sweeten the offer.

Mentor said its deal offers Medicis the same strategic benefits of the Inamed deal, but on more favorable economic terms without the same antitrust risk.

"We are confident that our offer constitutes a superior proposal as contemplated by the Medicis/Inamed merger agreement and a better ability to close the transaction quickly. Our offer provides Medicis stockholders the opportunity to participate in the significant upside potential of the combined company, which would have a strong pro forma balance sheet," Levine said in a Mentor news release.

Medicis, however, doesn't see it that way, according to its board of directors.

"We are focused on maximizing stockholder value now and in the future. The proposal by Mentor is inappropriate in light of the recent trading history of the two companies and the pending stockholder votes on the Inamed merger. We continue to unanimously recommend that our stockholders vote in favor of our proposed merger with Inamed as we believe that a combination with Inamed will maximize stockholder value," the board stated in the release.

Both Mentor and Inamed have been seeking approval from the U.S. Food and Drug Administration to lift the ban on silicone breast implants.

A federal health advisory board recommended Wednesday that the FDA approve Mentor's silicone breast implant proposal, but a similar proposal by Inamed on Tuesday failed to satisfy the board and get a recommendation, according to news reports. The FDA isn't bound by these recommendations.

Santa Barbara, Calif.-based Mentor makes breast implants. Inamed, also based in Santa Barbara, is a rival breast-implant maker.

Medicis is a Scottsdale, Ariz., pharmaceutical company specializing in dermatology products and is the maker of wrinkle cream Restylane. Irvine, Calif.-based Allergan is a drug development company and maker of wrinkle-treatment Botox.

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