Valueact Places CEO On Valeant Pharmaceuticals International's Board In Effort To Force Allergan Inc. Takeover

Published: Sep 26, 2014

ValueAct Places CEO On Valeant Pharmaceuticals International (VRX)'s Board In Effort To Force Allergan Takeover

September 26, 2014

By Jessica Wilson, Breaking News Sr. Editor

Hedge fund and private equity firm ValueAct Capital, LLC said Thursday it will be placing its chief executive on the board of directors of Valeant Pharmaceuticals in an effort to push through a proposed hostile takeover of Botox maker Allergan Inc. .

ValueAct CEO Jeffrey Ubben now becomes a director of the board of the pharmaceutical company on Oct. 1. In the wake of the announcement, Valeant share prices rose more than three percent. The Montreal, Canada-based pharmaceutical company, is in the midst of a $53 billion hostile takeover of Allergan, Inc., the Irvine, Calif.-based pharmaceutical company. ValueAct currently holds a 5.6 percent stake in Valeant, which makes it the pharmaceutical company’s second largest shareholder.

“We [at ValueAct Capital] are strongly supportive of the Allergan-Valeant combination in light of their perfect strategic fit,” Ubben said in a statement. “ValueAct has not reduced its position in Valeant since leaving the Board in May and we expect to increase our already substantial position in Valeant.” He said that he would take an active role in the takeover bid, stating, “I look forward to working with Board of Directors [of Valeant] to help secure the Allergan transaction and then continuing to serve on the Board to deliver long-term value to all shareholders.”

Ubben’s statements are an about-face from the position he expressed to Reuters in an interview in August, when he was quoted as saying, “We really believe in the stand-alone plan [for Valeant]. We do not need to do the Allergan deal."

At the time of Ubben’s August statements, ValueAct did not have a presence on the Valeant board because San Francisco, Calif.-based ValueAct’s previous representative, Mason Morfit, had stepped down in May in order to devote time to the hedge fund’s largest holding, Microsoft Corporation (MSFT). Ubben has not explained his change of heart.

Ubben did state that he felt Valeant has been undervalued lately. In the press release announcing his appointment, he was quoted as saying, “"Valeant has been an important component to ValueAct's success over the past seven years and we strongly believe in Valeant's business model and strategy.”

ValueAct began its relationship with Valeant with an investment in 2006 when Valeant was a small drug developer. Morfit joined the board in 2007. The hedge fund was involved in attracting Valeant’s current CEO Mike Pearson. The hedge fund and Person transformed Valeant into a generics maker with a market value of more than $40 billion.

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