U.S. hedge fund says Valeant doesn’t need to buy Allergan

ValueAct Capital CEO supports ‘stand-alone’ plan

M&A NEW YORK • ValueAct Capital LLC, a top shareholder in Valeant Pharmaceuticals International Inc., supports the company’s independent business plan and does not believe the Canadian drugmaker has to buy Allergan Inc., the investor told Reuters on Monday.

ValueAct likes a potential com- bination between Valeant and its takeover target Allergan, but said a drawn-out bidding war for the Botox maker might be too distracting.

“A year on the sidelines waiting for [Allergan] to do a scorchedearth sort of defense is a huge cost to Valeant,” ValueAct chief executive Jeff Ubben told Reuters.

ValueAct has a stake of roughly 5.7% in Valeant, making it the company’s third-largest investor, according to Thomson Reuters data.

“Mike has other targets and other things to do with his low tax rate,” Mr. Ubben said, referring to Valeant chief executive Mike Pearson.

In an emailed statement on Mon- day, a Valeant spokesman said: “We agree that Valeant has very attractive stand-alone prospects.” Although Valeant still believes an Allergan combination would “create extraordinary value for both sets of shareholders,” the spokesman said, Valeant also “has a rich pipeline of other business development opportunities.”

Allergan is fighting a hostile US$52-billion bid from Valeant, which teamed up with billionaire investor Bill Ackman. The company has accused Valeant and Mr. Ackman of violating securities laws by using insider information as they prepared a takeover bid.

“We really believe in the standalone plan. We do not need to do the Allergan deal,” Mr. Ubben said, adding that he saw Valeant stock rising to US$130-to-US$140 within a year’s time.

Shares of Valeant fell 1.76% in New York on Monday to close at US$107.25.