On November 17, 2014, Allergan, Inc. announced a $66 billion merger agreement with Actavis plc, thwarting the pending $53 billion bid for Allergan by Valeant Pharmaceuticals International Inc. Valeant had teamed up with Pershing Square, a fund run by activist investor Bill Ackman, to facilitate an acquisition of Allergan by Valeant. Although the Valeant bid has failed, Pershing Square apparently will recognize a gain of well over $2 billion on consummation of the Actavis merger.
The distinguishing feature of Valeant’s now-failed pursuit of Allergan was the bidder-activist collaboration itself, which was the focal point for public attention throughout the saga. Corporate America’s initial reaction to the Pershing Square-Valeant model was fear that the model would be followed by others, unleashing a new wave of hostile takeover activity in a context that appears to make target companies particularly vulnerable. Now, at the end-point of Valeant’s bid for Allergan, we note the following: