Valeant ($VRX) and partner Bill Ackman may not yet have bagged acquisition target Allergan ($AGN), but that doesn't mean Ackman hasn't profited off the bid for the California drugmaker--at least on paper. Shares have leapt since the takeover team went public with its plans in mid-April, helping push gains for Ackman's hedge fund, Pershing Square Capital Management, to $1.2 billion.
As Reuters reports, Allergan's shares as of Friday were trading about 34% above the fund's average trading costs per share; last month, Ackman said the trade amount on the majority of that stock was $126.54 per share. Those shares hit $169.45 at the end of last week, so with 28.9 million of them, Ackman has reaped some hefty returns.
And Ackman's share tally may still be growing. Pershing Square received Federal Trade Commission permission to convert Allergan options into shares, a source told the news service late last week.
But Allergan's board is less than enthused with the $47 billion bid Ackman and Valeant CEO J. Michael Pearson put forth for the company. It has since swallowed a poison pill, meaning Ackman's shares may not be enough to seal the deal. The plan blocks him from significantly bolstering his position, allowing investors to buy up shares at a discount if he takes his 9.7% stake past the 10% threshold.
Still, some analysts think the deal-hungry Canadian pharma will prevail, and Pearson has said he expects to get the deal done. Allergan, for its part, has reportedly started in on another defense plot, readying a second bid for Ireland's Shire ($SHPG) and approaching companies like Sanofi ($SNY) and Johnson & Johnson ($JNJ) to assess their white-knight interest.
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