Pfizer and Allergan made it well known that they didn’t much like the new U.S. Treasury rules that scuttled their $160 billion megamerger. They weren’t alone.
Hedge funds that bet big on the deal lamented its collapse--and scrambled last quarter to correct their mistakes.
Blue Ridge Capital and Viking Global Investors each whittled their Allergan stakes down by more than half after Pfizer nixed the transaction in April, according to regulatory filings seen by Reuters. On the other side of the coin, Senator Investment Group and Jana Partners pulled their money from Pfizer.
As to where investors put their dough instead? Some even flocked to embattled Valeant; Fidelity Investments, for one, picked up 10 million Valeant shares in Q2.
Other big investors stuck around, though, betting on better times ahead for Allergan. Third Point largely stayed put at 4.9 million shares, while Baupost Group raised its holdings by 16% to 2 million shares. And then, of course, there was notorious proxy brawler Carl Icahn, which nabbed a new, 3.4-million-share position in the Dublin drugmaker.
And those who ran from Pfizer missed out on the stock’s 16% climb--though Diamond Hill, which padded its stake post-breakup, reaped the benefits, Reuters notes.
Since the drugmakers saw their deal plans fall through, both have promised shareholders that there’s much to look forward to. Both have been quick to return to the dealmaking table, too; Pfizer is reportedly one of several Big Pharma players in the hunt for cancer drugmaker Medivation, while Allergan--which says it’s dedicating itself to smaller buys--last week agreed to nab vision company ForSight for $95 million.
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What would Pfizer do without Allergan--and Allergan without Pfizer?