Valeant recently made several attempts to get into confidential discussions and due diligence with ISTA. Valeant has a history of acquiring companies that have niche products on the market and the ISTA acquisition would be in line with their business strategy to minimize their development investment and focus on marketing and sales. ISTA has several products on the market already and is in a good position to launch several more in the next few years so they probably looked like a worthwhile take over target. After getting rebuffed by ISTA, Valeant tried an unusual tactic of trying to get the shareholders of ISTA to pay attention by publishing an open letter that proposed doubling their share price with a $6.50/share buyout offer.
ISTA has been a publicly traded company for more than 10 years. Their stock price has fluctuated dramatically and has generally followed market trends. They have seen declining stock prices for the last few months and there was no indication that much had changed by the time Valeant made their proposals. However, It’s interesting that on the day that Valeant published their open letter to stock holders, the price immediately doubled. It may be that traders expect an even greater buy out price by Valeant and they are trying to get in line. ISTA may be smart to hold out and let their new products flow from development into the market before considering being acquired. At least the traders seem to think there are significant upsides in their market price on the way.
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