Top investor bails on Valeant bid, backing Allergan-Shire combo instead

Bill Ackman

Valeant's ($VRX) takeover partner, Bill Ackman, is not slowing down in his pursuit to land a deal for Allergan ($AGN). But a key investor may no longer be quite so gung-ho.

In a Monday California court filing, Ackman--whose hedge fund, Pershing Square, is Allergan's largest shareholder--accused the Botox-maker of scheming to "depress Valeant's stock price, in turn reducing the value of Valeant and Pershing Square's proposals, fueled by deliberately false statements" as it looked to dodge the Canadian pharma's hostile bid.

One such way? Allergan "conducted a highly unusual road show," going to Canada to meet with Valeant shareholders. The only plausible purpose for those, Ackman contends in the filing, was to "injure" its pursuer and sink shares--which, he notes, violates federal securities law.

But meanwhile, newly-single Shire has arrived back on the scene after a tax-fueled breakup with deal partner AbbVie, and the Dublin pharma may be ready to tango. Hedge fund Paulson & Co., for one, seems to think it's a good idea: A rep from the company called Allergan last week and urged its CEO, David Pyott, to consider making a bid, The New York Times' sources say.

Paulson, with stakes in both companies, has good reason to push for an Allergan/Shire tie-up, especially after the AbbVie divorce sent Shire's shares reeling. And that threatens Valeant. When the fund picked up 6 million-plus Allergan shares in June, Paulson said it would Valeant's offer. With a key shareholder meeting approaching in December--at which Allergan investors will vote on more deal-friendly slate of directors proposed by Ackman--it's not a good time for Valeant to lose any takeover support.

For Allergan, Shire could be the partner it needs to thwart Valeant once and for all. It wouldn't be the first time Allergan approached the Irish pharma: Rumor has it Allergan came calling before Valeant was even in the picture, and it reportedly weighed a second try before AbbVie swooped in to nab the Dublin drugmaker.

- see the complaint (PDF)
- read the NYT story (sub. req.)
- get more from Reuters

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

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