In yet another sign that it's not about to abandon its hostile bid to buy Allergan ($AGN), Valeant ($VRX) has named activist investor Jeffrey Ubben to its board. Ubben is chief executive officer of ValueAct Capital Management, Valeant's second-largest shareholder and a new supporter of the Allergan deal.
Ubben's appointment comes four months after ValueAct president Mason Morfit stepped down from Valeant's board, citing his desire to free up the company to sell shares without insider restrictions. Now ValueAct plans to increase its stake in Valeant and help the board "secure the Allergan transaction," according to a company press release.
"Valeant has become significantly undervalued on a standalone basis due to recent unjustified attacks on the company," Ubben said in the statement. "We are strongly supportive of the Allergan-Valeant combination in light of their perfect strategic fit and the potential to create enormous shareholder value for both companies."
It's an interesting turnabout from just a couple of months ago, when Ubben told the press he thought Valeant didn't need Allergan. Back then, he griped that a bidding war would be too distracting and that Valeant could easily find other targets that would be more amenable to deals.
Valeant now has two activist shareholders on its side in the ongoing attempt to get Allergan to agree to the $53 billion deal. Allergan has reportedly been trying to thwart the deal by acquiring Salix Pharmaceuticals ($SLXP) for $10 billion. But earlier this week, investor William Ackman of Pershing Square Capital Management--Valeant's largest shareholder--threatened to sue Allergan if it goes ahead with that plan. Allergan responded by calling Valeant's offer "grossly inadequate," though it's still planning to hold a special shareholder meeting on the matter in December.
Now Valeant may have another ally in this fight: its share price. On Wednesday, Valeant said it would beat its previous guidance in the third quarter on both revenue and cash earnings, thanks largely to strong performance by its Bausch + Lomb division and same-store growth of more than 15%. The company's stock is up more than 8% this week, soaring past $125 on Wednesday and charting its best performance since this whole Allergan mess started.
At that price, Valeant's offer for Allergan is worth $178 a share, The Wall Street Journal points out--tantalizingly close to the $180 a share that Ackman had previously said would sway Allergan shareholders to vote in favor of closing the deal.