Ackman And Valeant Team Up To Pursue Takeover Of Allergan

valeant pharmaceuticals

Activist hedge fund manager Bill Ackman is bringing his sometimes bare-knuckle expertise at the takeover game to Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) as the highly efficient roll-up company targets Botox wrinkle treatment company Allergan, Inc. (NYSE:AGN) with a takeover offer.

Activist hedge fund with successful track record at “encouraging” boards to make the “right” decisions teams with Valeant to acquire Allergan

The Wall Street Journal is reporting that Ackman’s Pershing Square Capital Management has acquired $4 billion in Allergan, Inc. (NYSE:AGN) stock, making this the fund’s largest investment in its history.

According to a CNBC report, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) approached Allergan nearly one year ago but was rebuffed. This time Valeant has brought with them the tough guy on the street to “encourage” board members to welcome the Valeant offer.

The most recent takeover offer is unsolicited and Wall Street sources expect a fight, but the Ackman component remains the wildcard in his effectiveness in convincing Allergan to accept the takeover offer.

Valeant was rebuffed, now combing back with Ackman as “improved” offer

The Wall Street Journal is reporting that Valeant and Pershing Square hooked up in February after Ackman approached Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) , who had been rolling up various pharmaceutical companies. Operated by former McKinsey Consultant  Michael Pearson, Valeant does not engage in research and development to innovate products, but rather combines companies and reduces operating expenses to boost earnings.

After the meeting Pershing Square started buying the stock, the report said. The stock price had risen just before the close of trading today, and when the official announcement was made after trading hours Allergan, Inc. (NYSE:AGN) was up nearly 20%.  Valeant, which has a history of rising after announcing takeovers unlike many takeover firms, was up $20 per share after hours, trading at $140.

Bill Ackman?  His hedge fund is currently up over $1 billion on the trade.



About the Author

Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com