John Paulson is going to have a conference call with Bill Ackman tomorrow that could be rather interesting.
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Paulson: How to unseat Allergan’s board
The topic of discussion is how to unseat the Allergan, Inc. (NYSE:AGN) board of directors, Paulson, founder of the hedge fund Paulson & Co., said in a speech at the Delivering Alpha Conference in New York City today.
While there has been a debate about the value of the roll-up techniques of pharmaceutical giant Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX), currently in a battle to take over Allergan, Paulson is positive on the firm. “I don’t think anyone has created more value for shareholders than Valeant,” he was quoted as saying. This was a big statement that could be disputed by looking at a company such as Apple Inc. (NASDAQ:AAPL), which created value by investing in research and development and product innovation. Valeant is known for purchasing corporations, gutting the research and development staff and generating short term profits for investors. Paulson did not differentiate between long and short term value creation in his speech.
Paulson and Ackman long on Allergan
Both Paulson and Ackman are long Allergan, Inc. (NYSE:AGN). “(It’s) an interesting and perhaps controversial situation,” Paulson was quoted as saying. Paulson said Allergan could be worth $222 per share. The stock is currently trading at $165.
Paulson confirmed that he generated a paper profit of $360 million on news two days ago that Whiting Petroleum was offering to purchase Kodiak Oil & Gas Corp (NYSE:KOG), but appeared more excited about an acquisition in which he wasn’t involved.
21st Century Fox – Time Warner bid: Paulson skeptical about significant upside
Considering the Twenty-First Century Fox Inc (NASDAQ:FOXA) bid for Time Warner Inc (NYSE:TWX), Paulson was skeptical about significant upside. “There’s a limit to what Fox can actually pay for Time Warner” because they are about the same size, he was quoted as saying.”There’s not a lot of potential acquirers.”
Without competition for the company and a clear path in regards to anti-trust concerns, the question is will Rupert Murdock bid against himself. “The question is does (Fox CEO Rupert) Murdoch come back with another bid?” Paulson questioned. “How high can he go? It’s exciting…but it’s not a slam dunk as to what the outcome might be.”
Overall Paulson was optimistic about merger-based investing. “This is a very exciting time to be involved in merger arbitrage,” he said, as low interest rates, record stock valuations, and transactions being “accretive” were all providing wind in M&A sails.