Tuesday, 30 August 2016
Last updated 12 min ago
May 5 2014 | 11:32am ET
Pershing Square Capital Management has already made $1.2 billion on its huge stake in Allergan Inc., one which it has now won the green light to finalize.
The New York-based hedge fund built its 9.7% stake in the Botox maker primarily with call options and forward purchase contracts. Federal law requires investors to notify both the Federal Trade Commission and Justice Department about plans to buy voting securities; Pershing Square did so on April 21, and won permission from the FTC last week.
There is normally a 30-day waiting period for such acquiescence; Pershing Square got it within two weeks.
Pershing Square is working with Valeant Pharmaceuticals International on the Allergan deal. Valeant has proposed a $46 billion hostile takeover of Allergan, which Pershing Square supports. Allergan is Pershing Square’s largest-ever investment, and buying the shares it has the right to would take about one-third of its assets under management.
At the moment, the investment is also one of Pershing Square’s most successful: The stock is trading about 34% higher than the hedge fund’s average price. In addition, other hedge funds have leapt into the fray, with Citadel Investment Group, Highfields Capital and Viking Global Investors all buying Allergan stakes recently.