|Rep. Edward Royce (R-CA)|
It remains to be seen whether unconventional M&A tactics from Valeant's ($VRX) takeover partner, Bill Ackman, will help the pair get a deal for Allergan ($AGN) done. But in the meanwhile, one lawmaker is putting heat on the SEC to consider revising the rules that allowed them.
Rep. Edward Royce (R-CA) is taking issue with the conditions that allowed Ackman to delay publicly reporting the 9.7% stake his company, Pershing Square Capital Management, amassed in Allergan this spring, which put him in position to team up with Valeant on a bid for the drugmaker.
According to ValueWalk, SEC Corporation Finance Director Keith Higgins said at a House hearing Thursday that neither the commission nor the courts has determined whether the two parties getting together constitutes insider trading. But as a spokesman for Royce told Reuters before the hearing, the lawmaker is prepared to take legislative action of his own if the SEC doesn't act.
But while Royce may not be so thrilled with Ackman, Wall Street bankers seem to feel differently. They're lining up to fund the potential $54 billion deal with more than $20 billion of junk debt, Bloomberg reports.
As a Wednesday filing states, banks including Barclays and RBC have raised loan commitments to $8 billion and vowed to arrange $12.4 billion of high-yield bonds to fund the hostile bid, the news service notes. Demand for high-yield, high-risk debt has made it simple for junk-rated borrower Valeant to finance the merger, by far the Canadian pharma's biggest in its long string of pickups.
"The Street seems to really like these guys," KDP Investment Advisors analyst Mark McCabe told Bloomberg.
Special Reports: Pharma's top 10 M&A deals of 2013 - Valeant/Bausch + Lomb | The most influential people in biopharma today - J. Michael Pearson - Valeant | 20 Highest-Paid Biopharma CEOs of 2012 - David Pyott - Allergan