Actavis Sweeps Allergan Off Its Feet, Valeant Bows Out

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It’s official. Actavis plc (NYSE:ACT) and Allergan, Inc. (NYSE:AGN) have consummated a deal at a significant premium to its Friday close, with Actavis offering to purchase Allergan for $219 per share, according to an Allergan spokesperson. Actavis will acquire Allergan for a combination of $129.22 in cash and 0.3683 Actavis shares for each share of Allergan common stock.  Based on the closing price of Actavis shares on November 14, 2014, the transaction is valued at approximately $66 billion, or $219 per Allergan share, making it one of the largest stock deals of 2014.

In Monday trading Allergan’s stock price was up over 7 percent from Friday’s close, trading at $212.64.

Allergan’s acquisition price

The final price Allergan, Inc. (NYSE:AGN) fetched was expected to exceed $200 per share and may even come close to the $209 level that Allergan Chief Executive Officer David Pyott had mentioned as fair value in sealed court documents. At $219 per share, Actavis plc (NYSE:ACT) significantly outbid even the high end of expectations.

“This acquisition creates the fastest growing and most dynamic growth pharmaceutical company in global healthcare, making us one of the world’s top 10 pharmaceutical companies,” Brent Saunders, CEO and President of Actavis, said in a statement. “We will establish an unrivaled foundation for long-term growth, anchored by leading, world-class blockbuster franchises and a premier late-stage pipeline that will accelerate our commitment to build an exceptional, sustainable portfolio.

The deal with Actavis plc (NYSE:ACT) might also involve a controversial tax inversion, as the firm is domiciled in Ireland, but has its primary management office is in Parsippany, NJ and its directors are primarily located in the U.S.

Alergan fending off Valeant

Allergan, Inc. (NYSE:AGN) for its part had been signaling last week that it was still fighting the Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) deal.  The company’s supporters had indicated that doctors did not support the Valeant deal and late Friday the company noted how a U.S. Federal Court again ruled in its favor that Pershing Square and Valeant must provide additional disclosures with the Securities and Exchange Commission relative to their somewhat controversial combination of efforts to acquire Allergan.

“Allergan is pleased the Judge has ordered Valeant and Pershing Square to provide additional disclosures to our stockholders, including the important fact that Valeant and Pershing Square face the risk of significant damages awards or disgorgement of profits resulting their conduct,” an Allergan spokesperson said in a statement emailed to ValueWalk.

The fact Ackman had advanced knowledge of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX)’s intentions to purchase Allergan, Inc. (NYSE:AGN), and traded on that information before the news was public, is a key bone of contention in many quarters, including inside the SEC. Ackman made $1 billion in paper trading profits the first day the deal was publically announced.

Valeant bows out of Allergan deal

Valeant, for its part, appears to have bowed out of the deal, saying the price was too high. “We have seen the announcement that Allergan and Actavis plc (NYSE:ACT) have made, and… Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) cannot justify to its own shareholders paying a price of $219 or more per share for Allergan, Inc. (NYSE:AGN),”  J. Michael Pearson, Valeant’s Chairman and CEO, said in an email statement, and then pointed to the future. “We will remain focused on delivering strong organic results and evaluating acquisition opportunities as we always have: prudently, in a disciplined manner, and in the best interests of our shareholders.”

Ackman could be changing his tactics by acquiring a target first and then getting a company to come aboard. The Wall Street Journal, citing unnamed sources familiar with the matter, is also reporting that Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) could turn to veterinary products supplier Zoetis Inc (NYSE:ZTS) as its next acquisition target.  Ackman had purchased the stock last week and ValueWalk noted this could be a change in tactic from one that potentially crossed the edge of SEC tolerance to one that is more clearly falling within an acceptable regulatory framework.

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