ISTA Pharmaceuticals has rejected a hostile takeover bid from Valeant Pharmaceuticals International worth around $327 million, describing the proposal as "grossly inadequate".

Valeant, which has hit the acquisition trail hard over the past couple of years, has offered $6.50 per share in cash, valuing the firm at $314 million and it would take on $13 million of debt. This represents a premium of 68% over ISTA's closing price on December 15.

Valeant has gone hostile after approaching the eyesore specialist in October. ISTA refused to enter into a confidentiality agreement and rejected the former's proposal. Michael Pearson, Valeant's chief executive,  said "we would be willing to consider improving our offer price if we were allowed to conduct due diligence and found additional value".

He added that "we believe ISTA stockholders should not be denied the opportunity to determine for themselves whether their board and management should engage…in a meaningful and productive dialogue regarding our proposal. We have already devoted significant time and resources to pursing this potential transaction".

Mr Pearson said the offer will remain on the table only until January 31, but the board at Ista is not moved. In a letter to Mr Pearson, chief executive Vicente Anido said his directors began a thorough review of his proposal and unanimously rejected it "as grossly inadequate" as it "significantly undervalues ISTA".

 2012 'pivotal year' for ISTA

He went on to say the board "does recognise that volatile markets since July 2011 have put pressure on ISTA's stock price" and other specialty pharmaceutical companies. "That said", Mr Anido went on, "we are now ending a pivotal year…which featured the important conversion" from Xibrom, a twice-daily version of bromfenac, a non-steroidal anti-inflammatory drug for the treatment of ocular inflammation and pain after cataract surgery to once-a-day bromfenac, sold as Bromday.

He also spoke of strong market share growth for Bepreve (bepotastine), an eye drop for ocular itching associated with allergic conjunctivitis. As a result, "ISTA is poised to demonstrate significant revenue growth in 2012".

Valeant, which has just completed $422.5 million acquisition of Sanofi's Dermik dermatology unit, is currently buying Australia's iNova Pharmaceuticals and recently purchased fellow Canadian company Afexa Life Sciences.