|Allergan CEO David Pyott|
Former Allergan ($AGN) CEO David Pyott and activist investor Bill Ackman called each other plenty of things during last year's months-long Valeant-Allergan takeover battle. But Pyott had a new one during a Senate committee hearing on Thursday.
Ackman--which partnered with Valeant ($VRX) on its buyout attempt, grabbing a 9.7% stake in Allergan to help press it toward a deal--was the leader of a "wolf pack," Pyott said, as quoted by Bloomberg. As he told the Senate's Permanent Subcommittee on Investigations, Ackman's goal was to rally others to back his position after he accumulated his Allergan shares.
Pyott slammed both the ability of activist investors to quietly build up holdings in their target companies and the U.S. tax code, the news service reports. The hearing focused on tax rules that give foreign-owned companies a leg up at the bargaining table when working to snap up U.S. companies; in his written testimony, Pyott estimated that tax savings gave Canadian Valeant and Ackman's hedge fund, Pershing Square, a $9 billion valuation advantage.
While Valeant ultimately lost out on an Allergan takeover thanks to white knight Actavis, plenty of other foreign drugmakers have successfully leveraged their tax advantages to nab U.S.-based targets. Actavis itself moved its address to Ireland after swallowing Warner Chilcott in 2013, and before folding in Allergan, it bought up New York's Forest Labs. Valeant has picked up drugmakers like Medicis, Bausch + Lomb and Salix since redomiciling in 2010, and Endo ($ENDP), which shifted to Ireland with 2014's Paladin Labs tie-up, has added deals for DAVA and Auxilum. (It has one pending for Par Pharmaceutical, too.)
Currently, Ireland's Horizon Pharma ($HZNP) is working to add itself to that list with a takeover of California's Depomed ($DEPO). The company has pointed to the 38% of profits that Depomed shelled out on taxes last year, arguing that joining hands would generate "significant" savings.
A lower tax rate "gives you synergies that allow you to compete when it comes to valuing assets," CEO Timothy Walbert told The Wall Street Journal. "We think about it as leveling the playing field."
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