Hedge fund to push Allergan takeover
Valeant jumps on hopes deal will go through
Hedge fund ValueAct Capital said on Thursday it would return to the board of directors of Valeant Pharmaceuticals International Inc., which is pursuing a hostile takeover offer for Allergan Inc., and that it planned to increase its stake in the company.
Valeant shares rose more than 3%.
ValueAct chief executive Jeffrey Ubben said in a statement that once he is on the board, he would work with Valeant on its US$53-billion acquisition of Allergan, a deal whose certainty he has previously questioned.
Valeant and Pershing Square Capital Management LLC, which owns nearly 10% of Allergan, made a bid in April for the Botox maker. Allergan has consistently rejected the offer and questioned the company’s business methods, saying it relies too much on acquisitions for growth and cuts research and development too deeply.
ValueAct, which owned 5.7% of Valeant as of June 30, had a seat on the company’s board until May, when its representative, Mason Morfit, stepped down to devote time to the fund’s largest holding, Microsoft Corp.
“They’re basically saying: ‘We’re back on the board and looking to increase our pos- ition,’ ” said analyst Umer Raffat of investment research firm ISI Group. “I think both those things are going to be perceived very positively by people who have questioned Valeant’s business model.”
Mr. Ubben in August expressed some concerns about the hostile bid for Allergan, saying while he still liked the it, a drawn-out battle to control the company would come at too high of a cost for Valeant if it lost other opportunities.
Other investors had also said that they wanted to see more signs that the legal battles Allergan had mounted would not delay the deal well into 2015.
Since then, Allergan and Valeant have settled one of
We’re back on the board, looking to increase our position
the lawsuits, although another insider-trading case in federal court in California has continued. Allergan also agreed to set a Dec. 18 date for a shareholders meeting.
Pershing Square, led by activist investor Bill Ackman, has asked for the meeting as part of a group of investors representing 35% of the company’s shares and is seeking to name new board members at Allergan.
Shares of Valeant, which is Value Act’s second largestholding, were up $4.37, or 3.2%, at $141.66 in Toronto trading. Allergan dipped 0.8% to US$174.88 in New York trading.