The Take-No-Prisoners Battle Over Allergan
In a year filled with hostile bids, the Allergan-Valeant fight had it all: strange alliances, trash talk, lawsuits and plenty of scorched earth.
April 06, 2015 at 11:36 PM
15 minute read
Toward the end of the Boston marathon last April 21, the only thing keeping Cary Hyden going was the promise of a hot shower, a nap and, he says, a “decent restaurant meal.” But that was not to be. When Hyden, head of Latham & Watkins' Orange County corporate group, got to his hotel room, he found several missed calls from his partner Paul Tosetti. Longtime client Allergan Inc., maker of the anti-wrinkle drug Botox, had received a $45.6 billion cash-and-stock offer from Canada's Valeant Pharmaceuticals Inc.
Allergan, a company with little long-term debt and an active research and development program, wanted no part of Valeant, which mostly grew by buying successful rivals and cutting back on R&D. Allergan had already rebuffed one expression of interest from Valeant. But this time, Pearson had backup: the brash activist investor William Ackman and his hedge fund Pershing Square. As part of a self-styled joint bid, Ackman had quietly accumulated nearly 10 percent of Allergan's stock. Over the next 24 hours, Hyden and Tosetti helped Allergan adopt a poison pill; the provision allowed shareholders to buy stock blocks at a discount if anyone obtained a 10 percent stake, making a takeover prohibitively expensive.
Last year was filled with hostile takeover activity, but the long Allergan-Valeant battle was the nastiest of them all. It utilized top talent at some of the nation's preeminent firms: Latham, eventually fortified by Wachtell, Lipton, Rosen & Katz, for Allergan; Sullivan & Cromwell and Skadden, Arps, Slate, Meagher & Flom for Valeant; and Kirkland & Ellis for Pershing Square. It was predicated on a novel legal strategy devised by an unusual pairing of bidders. The next seven months were pure boardroom drama, punctuated by public relations campaigns, charges of misrepresentation, poison pills, escalating bidding, litigation in two states, and, finally, a rescue by a once-spurned white knight.
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