Valeant, Activist Investor Make $47B Takeover Bid for Allergan

UPDATE VIA THE FINANCIAL POST: Allergan has adopted a one-year stockholder rights plan, effective April 22, that gives existing shareholders a chance to buy shares at a discount, thus diluting shares held by the suitor, if one or more shareholders acquires 10% or more of its shares. 

 


Canada's Valeant Pharmaceuticals International and activist hedge fund manager Bill Ackman made an unsolicited $47 billion bid on Tuesday for Allergan Inc.

While it is unusual that Valeant would work with an activist investor, Ackman's Pershing Square Capital Management is Botox-maker Allergan's largest shareholder with a 9.7 percent stake.

Valeant is offering $48.30 in cash and 0.83 of its common share for each share of Allergan, valuing Allergan at $152.88 a share. A second Reuters report noted that Valeant Chief Executive Michael Pearson has said that Valeant won't pay "whatever it takes" to acquire Allergan, and will not turn its bid into an all-cash deal.

For the last few years Valeant, under the leadership of Pearson, has developed a reputation for buying big-name brands, such as Bausch & Lomb, and stripping out costs. Pearson said in January that Valeant's goal is to become one of the world's top five pharmaceutical companies by market capitalization by the close of 2016.

Forbes analysts are not sure the Valeant business model will work for Allergan, and foresee a complicated hostile takeover deal that may not happen at all. They are also predicting that other suitors may jump into the game, or that the stakes will be raised at some point.



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