Bill Ackman made my day yesterday by announcing that he, along with Valeant Pharmaceuticals, wants to buy Botox maker Allergan Pharmaceuticals. Or, I guess, that Valeant wants to buy Allergan, and Pershing Square is along for the ride. And that Pershing Square has already bought a big hunk of Allergan, taking Valeant along for that ride.
It is such a neat trick! The stock closed yesterday at $142, and is trading north of $160 now, but Pershing and Valeant bought 28.9 million shares at an average price of $129.28, meaning that they had over $300 million in paper profits last night. But that's just an appetizer; the real trick is that Valeant intends to acquire the whole company, and at a premium. Here is the acquisition proposal, offering $48.30 in cash and 0.83 shares of Valeant stock per Allergan share; based on a Valeant stock price of $132.17 as of around 10:30 this morning, that gets you $158 worth of stuff per Allergan share. If the deal goes through at that price, buying this toehold saved the Valeant/Pershing group over $800 million.
Not bad!
