Here's a novel idea: Allergan should consider buying Valeant, according to one of the embattled drugmaker's few cheerleaders. But Allergan isn't so keen on that plan.
Value investor Bill Miller, who manages the Legg Mason Opportunity Trust, put the suggestion out there Tuesday at the Delivering Alpha conference in New York, The Wall Street Journal’s Dave Benoit tweeted.
Bill Miller just floated that Allergan should consider buying Valeant -- a sentence so rich in irony that it's hard to type correctly.— Dave Benoit (@DaveCBenoit) September 13, 2016
Valeant, of course, tried for most of 2014 to buy Allergan before then-Actavis swooped in as a white knight. Since then, Valeant has unraveled, suffering through political pricing pushback, channel-stuffing allegations and debt-default worries--among other issues--to the point that it’s now looking to sell off pieces of its business to raise cash.
Several Wall Streeters were burned as Valeant spun out of control--including Bill Ackman of Pershing Square Capital Management, who teamed up with Valeant on the failed Allergan pursuit and earlier this year joined Valeant’s board in an effort to right the sinking ship.
Miller, though, sees the Canadian company as a money-making opportunity. He poured about 3.5% of his fund into Valeant in late March and early April, he said earlier this year, telling the WSJ that “where you want to take some risk is on companies that have already gotten crushed.”
Allergan chief Brent Saunders isn’t interested in any such risk.
“Every one of our acquisitions or deals has been growth-oriented. We look to buy young products that we think we can put into our hands and do better with and really grow, or we buy R&D assets. And best I can tell, Valeant just doesn’t fit that bill,” he said in an interview with CNBC last week.
@MaxNisen Brent Saunders was asked about this possibility on CNBC last week. He physically broke out in laughter.— Brad Loncar (@bradloncar) September 13, 2016
Instead, Allergan is zeroing in on so-called “stepping stone” deals “where we can really add to the therapeutic presence and look for cures and treatments for unmet need,” he said--and the Dublin drugmaker has stayed true to that focus lately, last week agreeing to snap up gene therapy startup RetroSense to get its hands on a candidate for a rare vision disorder.
And Wednesday, the company announced another pact--this one a $639 million accord for Vitae Pharma that’ll boost its dermatology pipeline--without engaging with skincare-focused Valeant.
That doesn’t mean Valeant hasn’t seen any interest from other takers, though. It reportedly turned down a joint takeover effort from Takeda and TPG, sources told the WSJ in May. And other buyers, including Spain’s Almirall, have expressed interest in snatching up pieces of Valeant’s business.
"We're still in very initial stages, but there are things that could interest us. We're studying the situation but waiting for more information," CEO Eduardo Sanchiz told Reuters in July.
- read the Saunders interview transcript
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