Allergan Inc. and Pershing Square Capital Management are making their pitches for their opposing views on a proposed $53 billion deal for the Botox maker.
Allergan today announced stronger-than-expected second-quarter profits and boosted its earnings outlook for the rest of the year. It also announced plans to cut 13% of its workforce, a move that will save $475 million next year.
Allergan is seeking to fend off the Pershing Square-backed offer from Valeant Pharmaceuticals International.
Meanwhile, Pershing Square’s William Ackman met with Institutional Shareholder Services last week to urge the proxy adviser to back it and Valeant’s call for a special shareholder meeting to vote his slate of candidates to take control of the company’s board. At the meeting, he blasted Allergan for what he called anti-shareholder bylaws.
Ackman reiterated that criticism at a hedge fund conference on Wednesday, calling Allergan’s requirements for the special meeting “unbelievably burdensome”—and that he’s seeking support of 45% of shareholders, rather than the 25% needed.
Still, Ackman called his joint bid with Valeant a “happy,” rather than hostile, one.
As Ackman and Allergan press the flesh, they can yank one name from their Rolodexes and add another: Mutual fund giant Capital Research and Management Co., Allergan’s largest shareholder until Pershing Square took its nearly 10% stake earlier this year, has sold its entire holdings of the pharmaceutical company. The Los Angeles-based firm had owned a 6.3% stake.
CRM sold its position after a meeting with Allergan CEO David Pyott.
Meanwhile, another hedge fund has joined Pershing Square and Paulson & Co. in buying in to Allergan: Samlyn Capital, led by SAC Capital Advisors veteran Robert Pohly, has boosted its stake to $150 million. The hedge fund has owned a small stake in the company since last summer, but recently made the company one of its five largest long bets.
Unlike Pershing Square and Paulson, which both support the Valeant deal, Samlyn has yet to take sides. It’s stake is much smaller than either of the other hedge funds, amounting to less than half a percent. Paulson’s stake is 2% and Pershing Square owns 9.7%.