If two’s company and three is a crowd, then four is asking for trouble. US plastic surgery product firm Mentor has become the latest company to get involved in the tussle between Allergen and Medicis over Inamed, offering to buy Medicis for $2.2 billion dollars in stock.
But Medicis, which sells a range of dermatological products, has been swift to rebuff the offer, saying that it wants to proceed with its $2.5 billion dollar offer for Inamed, best known for its breast implant business. Meanwhile, at least some Inamed shareholders have said they favour the $3.2 billion offer from Allergan, which sells the Botox (botulinum toxin type A) wrinkle treatment.
At stake is a dominant position in the US market for non-surgical treatments for the signs of ageing, referred to by Allergan as ‘medical aesthetic’ products. Earlier this year, Business Communications Co published a market research report suggesting that the total US market for non-surgical, anti-ageing products – including drugs, dietary supplements, cosmetics etc – was $45.5 billion and tipped to expand to nearly $72 billion by 2009.
Mentor sells breast implants that compete with Inamed’s products, as well as other products used in plastic surgery, so a link-up with Medicis would boost its position in the fast-growing non-surgical sector.
"We are confident that our offer constitutes a superior proposal as contemplated by the Medicis / Inamed merger agreement,” said Mentor chief executive Josh Levine. In a letter to Medicis CEO Jonah Shacknai, he noted that the merger would create ‘a global leader in the rapidly expanding aesthetics market, with combined annual revenues in the 12 months ended September 30, 2005 of nearly $900 million’.
The relatively low offer from Mentor suggests that the company is hoping that Inamed will fall into the hands of Allergan, and Medicis will then feel obliged to merge with Mentor to maintain its position in the market. Analysts said Mentor may have to hike the offer to make it more acceptable to Medicis shareholders.