Rumor has it, thanks to potential white knight Actavis, Bill Ackman and Valeant ($VRX) face a serious threat to their Allergan ($AGN) hostile bid. But Ackman may already be preparing for another move.
Ackman has picked up an 8.5% stake in animal health leader Zoetis ($ZTS) worth roughly $2 billion, The Wall Street Journal reports, and sources tell the paper he could pressure the Pfizer spinoff to sell itself to a bigger company. Like … Valeant.
While the WSJ's sources said there's no agreement between Ackman and his Allergan deal partner to bid for Zoetis, it could be a fallback plan if their play for the Botox-maker falls through. After all, Valeant CEO J. Michael Pearson, a serial acquirer, has some pickups to make if he wants to vault his company into the top 5 drugmakers worldwide by 2016, a goal he set back in January.
And as it happens, Pearson has said before that animal health is on his M&A radar. "We think, in a sense, it's branded generic products sold directly to the physicians and it's consistent with sort of the buy-and-build model that we like," he said on last year's Q4 conference call, noting that Valeant has to "find an asset at the right price."
Zoetis could potentially be that asset. With about 20% market share, it's the largest player in an animal health space worth about $22 billion, ISI Group analyst Mark Schoenebaum wrote in a note to investors.
And Zoetis may be more enthusiastic than Valeant's current buyout target Allergan--which has steadfastly refused to come to the bargaining table and fought Valeant's hostile bid at every turn. On an earnings conference call last week, Zoetis CFO Paul Herendeen said that Zoetis is "for sale every day" provided the right offer comes along, the WSJ notes.
- read the WSJ story (sub. req.)
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