Ackman Ties Valeant Drive to Buy Allergan to Easy Credit

Bill Ackman, chief executive officer of hedge fund Pershing Square Capital Management LP, said Valeant Pharmaceuticals International Inc.’s offer to buy Allergan Inc. may fall apart if the deal isn’t done this year.

“Valeant has committed financing, but commitments don’t last forever,” Ackman said on a conference call with investors today. “There’s risk. We’re in a very bullish credit environment right now. That can change effectively overnight.”

Pershing Square has teamed with Valeant in its bid to buy Allergan, the maker of the wrinkle treatment Botox, amassing 9.7 percent of Allergan’s shares. Valeant, of Laval, Quebec, has twice raised its offer, with the latest including $72 cash and 0.83 of a Valeant share. Allergan has repeatedly rejected Valeant’s terms as inadequate.

Ackman is pushing Allergan hard to do a deal, using everything from harsh criticism of his target’s management to threats he might walk away.

During today’s call with investors, he said Allergan’s board may take “value destructive actions to thwart the offer,” including bidding to buy another company for $10 billion or more without investor approval.

“Today’s presentation by Mr. Ackman is more of the same -- baseless accusations and mischaracterizations designed to distract stockholders so Valeant can acquire Allergan at the lowest possible price,” Scott Bisang, an outside spokesman for Allergan with Joele Frank, Wilkinson Brimmer & Katcher, said in an e-mail.

Special Meeting

Allergan rose less than 1 percent to $165.82 at 4 p.m. in New York trading. Valeant fell less than 1 percent to $121.52.

Ackman has called for a special meeting of Allergan’s shareholders before the end of the year to remove most of the company’s board and add six new directors. He said that while Valeant was committed to a deal, he couldn’t speak for the company if the special meeting were delayed another year.

“Valeant has a business to run,” Ackman said. “They’re going to see it through the context of a special meeting we’re going to hold at the end of the year. I can’t speak for Valeant if it’s a year from now.”

With Allergan resisting a takeover, both companies have attacked each other’s business models. Ackman sent a letter to Allergan’s board of directors yesterday, accusing it of breaching its fiduciary duty of care by refusing to engage in deal negotiations with Valeant.

“Your scorched earth response to Valeant is beyond the pale,” Ackman wrote in the letter. “We would have expected more from you based on your personal career track records up until this time.”

’Grossly Inadequate’

Allergan responded with a statement saying that Ackman “is simply trying to distract Allergan stockholders from the fact that the Valeant proposal is grossly inadequate.”

At $54 billion, this would be Valeant’s largest deal, eclipsing its $8.7 billion purchase of eye care company Bausch & Lomb Inc. last year.

Valeant Chief Executive Officer Mike Pearson has spent at least $19 billion buying more than 40 companies since he took the helm in 2008 as he aims to make Valeant one of the world’s five biggest drugmakers by the end of 2016..

The offer for Allergan includes a contingent value for the DARPin, a treatment for wet age-related macular degeneration, a disease which causes vision loss. DARPin may generate $20 billion in sales over a decade, according to the drugmaker.

Allergan is said to plan a broad restructuring plan, including shelving unpromising pipeline drugs and overhauling management incentives, to boost profits and forecasts for future years to convince shareholders that the company is better as a standalone investment.

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