(Adds Allergan included views from third-parties in itsstatement)
By Soyoung Kim and Olivia Oran
NEW YORK, June 16 (Reuters) - Morgan Stanley, anadviser to Valeant Pharmaceuticals International Inc inits $53 billion hostile bid for Allergan Inc, initiallytried to get hired by Allergan and in its pitch called theunsolicited bidder a "house of cards," according to Allergan.
The Botox maker released email exchanges with Morgan Stanleybankers on Monday, which reveal the bankers were pitching for adefense assignment from Allergan, offering advice as to how thecompany could successfully defend the unwanted suitor.
"Executives from Morgan Stanley, the investment bankunderstood to have recently been retained by Valeant, have sentemails directly to Allergan's management team that suggest theyshare the concerns of Allergan...," the company said in astatement. (Allergan statement: http://r.reuters.com/jep22w)
Allergan said that in a May 13 email to Chief ExecutiveOfficer David Pyott and Chief Financial Officer Jeff Edwards,Morgan Stanley's global head of M&A Robert Kindler said thecompany could be more aggressive in going after Valeant'sbusiness model and the value of its stock.
David Horn, a managing director at Morgan Stanley'shealthcare group, followed up with an email to Edwards on May18.
"Part of what Rob (Kindler) is suggesting (to Allergan) isto allow him to use his significant relationships with media andanalysts to provide a clear and detailed articulation of whyValeant is a house of cards and your investors should not wantto take their stock," Horn said in one of the email exchangesshown by Allergan.
Representatives of Morgan Stanley and Allergan declined tocomment.
"Kindler is one of the best M&A bankers out there. While wewill have some fun with him later, he's still very much on ourteam," Valeant CEO Mike Pearson said in a statement. "It's clearthat Allergan's release is a sign of desperation, and we lookforward to proving the naysayers wrong."
In addition to the email exchanges with Morgan Stanley, thedrugmaker in its statement also released third-party views fromanalysts, investors and media that question Valeant's businessmodel.
Morgan Stanley, like other investment banks, pitched forbusiness from both Allergan and Valeant as the bidding war escalated. Banks have different teams that work with differentclients, which sometimes have divergent interests.
In its Allergan pitch, Morgan Stanley argued that Allergan'sfinancial adviser, Goldman Sachs Group Inc, is notoutspoken enough in attacking Valeant's stock value because thebank is historically close to the Canadian drugmaker and hasdone a lot of business with the company, people familiar withthe matter said.
Goldman advised Valeant in its Bausch & Lomb purchase lastyear and provided committed financing for the transaction.Valeant's chief financial officer, Howard Schiller, was along-time Goldman executive.
Allergan chose not to add Morgan Stanley to its team offinancial advisers, partly because the bank has a potentialconflict having an overweight rating on Valeant's stock, peoplefamiliar with the matter said.
Valeant and its ally Pershing Square Capital Management -Allergan's biggest shareholder - have offered to buy Allergan for $53 billion in cash and shares. Allergan has rejected theoffer and refused to negotiate, leading Pershing to move towardreplacing most of Allergan's board at a special meeting.
However, Valeant's Toronto-listed stock has fallen in recentweeks, with Allergan stepping up its attack on the rival'sbusiness model. Shares of Valeant have fallen nearly 7 percentin the last five days, while the S&P 500 has remained flat.
Allergan has argued that Valeant shuns research anddevelopment and relies solely on acquisitions to drive growth, amodel which it calls unsustainable. Allergan has comparedValeant to Tyco, the scandal-plagued company which built itselfup through acquisitions and then collapsed.
Valeant has defended itself, with Ackman arguing that thecompany's business model is more similar to Warren Buffett'sBerkshire Hathaway Inc than to Tyco.
Allergan is working with Goldman Sachs and Bank of AmericaMerrill Lynch and legal advisers Latham & Watkins,Richards, Layton & Finger and Wachtell, Lipton, Rosen & Katz.
Valeant, which has been working with Barclays Plc and RBC Capital Markets for the past few months, hasrecently added Morgan Stanley as a financial adviser, peoplefamiliar with the matter said.
Valeant decided to bring in Morgan Stanley for its expertisein advising on hostile deals. While the company initiallybelieved Allergan would eventually come to the negotiatingtable, the target's repeated rejections made it clear the effortwas headed for all-out hostile bidding.
Companies often choose to hire additional advisers inprotracted, complicated takeover battles. When Sanofi SA made a hostile bid for Genzyme in 2010, which succeeded eventually, Morgan Stanley was brought on severalweeks into the process. (Editing by Sofina Mirza-Reid, Chris Reese and Lisa Shumaker)
Barclays (BARC)