Deals push up Actavis into ranks of top 10

AFTER a day like Monday, it is no surprise that revenues are up at law firms with significant merger and acquisition practices.

Actavis announced that it would buy Allergan for $66 billion (R732bn), while Halliburton announced its $34.6bn purchase of Baker Hughes.

Two deals of that magnitude have not been announced on the same day in 16 years, according to data compiled by Bloomberg News.

That was when energy giant Exxon agreed to buy Mobil and two European drugmakers struck the merger that created Aventis.

The two takeovers added to what has already been the busiest year for global deal-making since the record in 2007.

On the Actavis-Allergan deal, Cleary Gottlieb Steen & Hamilton represented Actavis, while Latham & Watkins and Wachtell Lipton Rosen & Katz represented Allergan.

Baker Botts and Wachtell represented Halliburton, while Davis Polk & Wardwell and Wilmer Cutler Pickering Hale & Dorr represented Baker Hughes.

It was especially busy for two Wachtell partners – Daniel Neff and David Katz – who worked on both.

In what was certainly an understatement, Katz described the stretch as “busy”.

What helped, he said, was the ability to divide up work with Dan Neff. The two often work together on hostile takeovers.

Also helping: the Allergan deal terms were straightforward, despite “twists and turns” since Valeant and William Ackman’s Pershing Square launched a tender offer for the company in April, Katz said.

“Both drafts were really ‘middle of the road’,” Katz said on Monday.

“While you often see buyerfriendly or seller-friendly” agreements, both were “reasonably negotiated documents which allowed people to move more quickly.”

Katz’s view was echoed by Latham partner Cary Hyden, who said his firm, along with Wachtell and Cleary Gottlieb, placed “a priority on putting grand-standing to the side to negotiate a deal for our clients”.

Wachtell acted as co-counsel to Allergan.

Wachtell’s team, in addition to Neff and Katz, included partners Gregory Ostling, corporate, and Joseph Larson, antitrust.

Although Valeant has said it would not try to top the Actavis offer, Katz said there was still a chance Ackman would seek to hold a shareholder meeting that was scheduled for next month.

Litigators are seeking an injunction to prevent that meeting.

Additionally, Allergan is pressing ahead with a lawsuit – now seeking an expedited appeal in the US Court of Appeals for the Ninth Circuit – in its case claiming that Valeant and Pershing Square violated federal proxy rules and committed insider trading in launching its tender offer.

The trial court judge on November 4 allowed Pershing Square to vote its shares but said the bid “raised serious questions” about insider trading.

Valeant and Ackman have denied any wrongdoing. – Bloomberg IN FIVE years, Actavis has reshaped itself from just another generics drugmaker to one of the top 10 pharmaceutical companies by market value, capping off a blistering pace of dealmaking with the $66 billion (R732bn) agreement to purchase Allergan.

Now it’s forecasting earnings per share of $25 in 2017, or 84 percent more than analysts’ estimates for this year. The plan is to cut $1.8bn in annual costs and use its sales force, focused on primary-care doctors, to generate more revenue from Allergan drugs like Botox, which have been traditionally marketed to specialists.

The acquisition, announced on Monday, would make Actavis a $100bn company, up from less than $5bn at the end of 2009. Allergan’s drugs give Actavis access to the ophthalmology market and further reach in dermatology, helping broaden the array of products it can promote to doctors.

“It’s going to be the best deal I’ve ever done in my career,” chief executive Brent Saunders said. “It’s about driving growth on the top line and leveraging growth on the bottom line.”

To strike the deal, Actavis had to beat out a hostile bid from Valeant Pharmaceuticals International, backed by activist investor Bill Ackman. Valeant said on Monday that it couldn’t justify a price as high as Actavis proposed.

The transaction took place against a backdrop of one of the busiest merger-and-acquisition environments in the history of the industry. Companies are jockeying for the choicest assets to fill out their collections of top-selling drugs, while seeking savings on overhead and taxes.

With Allergan, Actavis’s brand-name products in North America will make up 52 percent of revenue, according to filings, compared with 13 percent in 2013. – Bloomberg KENYA’S public debt was sustainable at 46 percent of gross domestic product because much of it was supporting transport and other projects that would fuel growth, the head of the central bank said yesterday. The east African nation raised $2 billion (R22bn) in June from a debut euro bond issue, building on a domestic issuance programme that has seen it offer 30-year bonds and specialist instruments to fund new infrastructure, such as roads and railways. Analysts have said that a debt rate rising above 45 percent or 50 percent of economic output would put more pressure on the government to rein in spending. “The government is borrowing to roll out public investments,” said Njuguna Ndung’u, without giving a figure. – Reuters

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