Hedge fund manager William Ackman’s Pershing Square, which picked up a nearly 10 percent stake in Botox maker Allergan Inc. (NYSE:AGN) on Monday, is working with Valeant Pharmaceuticals International Inc. (NYSE:VRX), to acquire Allergan.
The cash-and-stock offer, which includes a nearly $15 billion cash component according to an SEC filing, is expected to value the deal between $165 a share to $170 a share, Bloomberg reported Monday, citing a source. Ackman's Pershing Square, a New Jersey-based hedge fund with assets of about $13 billion, which spent about $4 billion to acquire a 9.7 percent stake in the Irvine, Ca.-based Allergan and believes the Botox treatment maker is undervalued, is pursuing the acquisition in partnership with Canadian firm Valeant, according to Bloomberg.
“We firmly believe that combining Valeant and Allergan would create an unrivaled platform for growth and value creation in health care, and we look forward to finalizing and announcing the terms of our proposal shortly,” Valeant reportedly said via e-mail, according to Bloomberg.
Valeant, which acquired Bausch & Lomb for $8.7 billion in August and is expanding from the generic drugs segment into the specialty drugs category by building a presence in ophthalmology, dermatology and dentistry, generated $.5.76 billion in revenues in 2013. Allergan’s revenues for 2013 stood at $6.2 billion, registering a 12.4 percent growth, helped by leading product Botox, revenues for which grew 12 percent to $2 billion.
“I don’t think it’s any secret that a combination of Valeant and Allergan would make a lot of sense,” Timothy Chiang, an analyst at CRT Capital Group LLC said, according to Bloomberg, adding: “The question has always been, it’s not whether Valeant would be interested in buying Allergan, it’s a question of would Allergan sell to Valeant.”
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On Monday, Allergan acknowledged the reports of an acquisition but said in a statement: “Allergan has had no discussions with either Valeant or Pershing Square with respect to this matter. The Company notes that neither Valeant nor Pershing Square has put forward an offer or proposal with respect to any type of merger transaction involving the Company, and the public disclosure materials filed by those entities suggest that they have expressly reserved the right to terminate their business relationship should no such offer be forthcoming.”
Valeant said in its filing that Barclays PLC (NYSE:BCS) and Royal Bank of Canada (NYSE:RY) have agreed to assist in the transaction. While Allergan’s stock jumped more than 20 percent in after-hours trading on Monday, Valeant’s stock soared 10.31 percent on the New York Stock Exchange.