After this deal closed saunders became the ceo of

This preview shows page 9 - 12 out of 30 pages.

Valeant, where Pearson was the CEO. After this deal closed Saunders became the CEO of ForestLaboratories which, after three months with Saunders as CEO, was sold to Actavis for $289
billion, representing a 25% premium. After this transaction, Actavis made Saunders CEO inorder to hold onto his talent (Herper, 2015). Given his M&A history, there is no questioning whySaunders decided to jump when he saw an opportunistic acquisition situation. His expertise ininorganic growth. Backed with a proven-track record of successful integration of acquisitions,his vision is to reproduce his past successes. Saunders was convinced that the two companies’characteristics and strategy together would result in “one of the fastest growing, most dynamic,pharmaceutical companies in the world’’. THE MERGER PROCESS VALEANT HOSTILE TAKEOVER BATTLE Valeant first showed interest in merging with Allergan in September 2012, when J.Michael Pearson, Valeant’s Chairman of the Board and CEO, had contacted David Pyott,Allergan’sChairmanoftheBoard,PresidentandCEO,regardingthepossibility of acombination of the two companies. Pyott responded shortly, stating that Allergan’s board wasnot interested in a combination of their businesses (SEC, 2014). Just under two years later,Pearson re-approached the possible M&A deal, this time with the help of Activist investorWilliam Ackman. The passing of time did not change Allergan’s feelings toward a combination ofbusinesses. In February 2014, Pearson invited Pyott to dinner (Crow, 2015), but Pyott cancelledthe meeting and made it publicly known through his discussions with analysts “that anacquisition of Allergan by Valeant “was not a good fit and shareholders would hesitate to takeValeant Paper” (SEC, 2014). On February 25th, 2014, Valeant and Pershing Square entered into an agreementoutlining a joint venture under which they would acquire Allergan stock in preparation for apotential transaction with Allergan. This same day, PS Fund 1, the joint venture entity formed topursue this transaction, began acquiring securities of Allergan. None of these actions werepublicly disclosed (SEC, 2014). On April 11, 2014, PS Fund 1 crossed the threshold of 5%ownership in Allergan. By April 21, 2014, when Valeant and Pershing Square each filed a10
Schedule 13D, they had already amassed a toehold of 9.7% of Allergan’s outstanding shares(SEC, 2014). The following day, Allergan adopted a poison pill that would stop Ackman andValeant from acquiring more shares or initializing a tender offer (Hoffman, 2014). April 22 was also the day that Valeant made their first public proposal to acquireAllergan. The offer consisted of US$48.30 in cash and 0.83 shares of Valeant stock in exchangefor each share of Allergan stock, representing a value per share of US$152.88 and a total dealvalue of about US$46 billion (Van Praet, 2014). This represents a 31% premium over Allergan’ssharepriceofUS$116.63onApril 10, the day before Pershing Square began rapidlyaccumulating shares (SEC, 2014). On May 12, 2014, Pyott sent a letter to Pearson stating thatAllergan’s Board had rejected Valeant’s proposal (SEC, 2014).

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture