News Column

Hedge fund manager Bill Ackman urges Allergan to consider Valeant takeover bid

May 6, 2014

By Bernard J. Wolfson, The Orange County Register



May 06--New York hedge fund manager William Ackman, who is teaming up with Valeant Pharmaceuticals in a $48 billion hostile bid for Botox maker Allergan, sent a letter Monday to Allergan's top outside board member to urge that the Irvine-based company enter negotiations right away.

A day before Allergan's annual shareholder meeting, Ackman argued in a letter to Michael Gallagher that Allergan is in a "good position to negotiate with Valeant" right now, because of the possibility of a competing bid from a large pharmaceutical company. However, the number of potential acquirers is limited, and some of them may not be a great fit for Allergan or might face antitrust challenges in such a deal, Ackman said.

"As a result, it is risky for Allergan to rely on the potential for it to negotiate a transaction with a global pharmaceutical company that is superior to the transaction proposed by Valeant," Ackman wrote. "Unless Allergan were to identify such a transaction in the very near future, the odds of such a deal are likely to decrease over time."

As that happened, Allergan's bargaining position would deteriorate, and Valeant "would consider reducing its offer if Allergan does not engage and no alternative suitor emerges," Ackman said. Therefore, he said, Allergan's board "should begin negotations with Valeant immediately."

An Allergan spokeswoman declined to comment on Ackman's letter.

Ackman's Pershing Square Capital Management quietly amassed nearly 29 million Allergan shares -- a 9.7 percent stake in the company -- between February and April to emerge as the largest shareholder. A spokesman for Ackman said he will not attend Allergan's shareholder meeting today.

Ackman, who stands to gain from a rising Allergan share price, suggested he would not necessarily oppose a "superior transaction" with a different company.

Contact the writer: 714-796-2440 or bwolfson@ocregister.com

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(c)2014 The Orange County Register (Santa Ana, Calif.)

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Source: Orange County Register (CA)


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