Top Valeant Stockholder Is Still ’Huge’ on Allergan DealBeth Jinks and Sonali Basak
Valeant Pharmaceuticals International Inc. shareholder ValueAct Capital Management LLC said it’s not selling the falling stock and backs the company’s efforts to merge with Allergan Inc.
“We believe in the company, management, and the deal in a huge way,” ValueAct Chief Executive Officer Jeffrey Ubben said yesterday. “Someone said we are selling. This is not true.”
Valeant, which has offered $54.2 billion for Allergan, traded lower for a ninth straight day and is now worth less than when its takeover attempt began. The shares fell less than 1 percent to $120.39 at 9:51 a.m. in New York. Allergan rose less than 1 percent to $162.33.
Allergan, the maker of the Botox wrinkle treatment, on June 10 rejected an increased bid of about $54 billion from Valeant and investor Bill Ackman, calling it undervalued. ValueAct is Valeant’s third-biggest shareholder with 5.7 percent, according to data compiled by Bloomberg.
“There is concern that if the deal doesn’t go through, Valeant doesn’t have enough wherewithal to stand on its own, and is unlikely to find a better target,” said Raghuram Selvaraju, an analyst with Aegis Capital Corp. He disagrees with those investors, has a buy rating on Valeant’s stock and said he feels that Valeant can “more than hold its own.”
ValueAct has been invested in Valeant since at least 2007. The fund’s president Mason Morfit resigned from Valeant’s board on May 5, in part to free the investor to sell part of its stake later this year if it chooses to do so, he wrote in a letter at the time.
Valeant, backed by Ackman, started a takeover bid on April 22, and has raised that offer twice, including their most recent offer of $72 a share in cash and 0.83 a share of Valeant stock.
Ackman runs the hedge fund Pershing Square Capital Management LP and, as of May 30, owned 9.7 percent of Allergan’s shares. His bid with Valeant turned hostile after being repeatedly rejected by Allergan.
Ackman has said six of 10 of Allergan’s biggest shareholders have told him they were disappointed with how Allergan’s board has managed the deal. Pershing Square filed on June 2 to have a special meeting of shareholders to overthrow Allergan’s board to make way for the buy out.
A Pershing Square affiliate also asked a Delaware court today to rule that a solitation of proxies for the shareholder meeting will not trigger a "poison pill’’ adopted by Allergan Inc.