Allergan

 
Allergan
 

FTI Consulting Supported Allergan in Defense Against Unique Hostile Takeover Led by Valeant and Pershing Square

Situation
  • Allergan, a long-time industry leader in pharmaceuticals and aesthetics, became the target of a hostile takeover attempt by serial-acquirer Valeant Pharmaceuticals in early 2014. Noting Allergan’s strong financial condition and the success of key products (Botox®, Restatsis®), yet relatively high R&D costs, Valeant sought financial support from Pershing Square Capital Management in an effort to merge the companies, slash expenses and R&D, and absorb its market-leading products, where it perceived there to be pricing power
  • Upon public disclosure of Valeant’s and Pershing Square’s intentions on April 22, 2014, Allergan implemented a multi-faceted defense strategy covering legal, financial, public relations and anti-trust bases to reject the proposed merger. Allergan’s Board of Directors and senior management team were adamant that Valeant’s three escalating offers of a mixture of cash and Valeant stock substantially undervalued Allergan’s common shares, notwithstanding a significant premium on a pre-offer basis
FTI Consulting Role

Allergan launched a multi-faceted campaign to prove that it would continue to outperform as a stand-alone enterprise, and that the cultural and structural combination of Valeant and Allergan would destroy, not enhance, shareholder and customer value. FTI Consulting’s role in this campaign included the following:

  • Organized a dedicated team of forensic accountants, investigators and industry experts to perform in depth reverse due diligence on Valeant’s historical financial statements, prior M&A targets and other publicly disseminated information to identify U.S. GAAP and other disclosure and regulatory issues, as well as other potentially false and misleading statements. This work was used to assess whether Valeant’s common stock should be considered as an acceptable form of currency in the proposed merger
  • Provided litigation support in connection with state and federal lawsuits associated with corporate governance and insider trading allegations
  • Responded to and/or rebutted public statements by Valeant, Pershing Square and the media regarding facts and circumstances associated with the proposed merger
Our research and background investigations
Allergan Graphic
Outcome
  • Supported consistent, positive coverage across major media and financial outlets, including the Wall Street Journal, CNBC, and The New York Times
  • Enabled an environment and a sufficient amount of time for a “white knight” offer to be made by Actavis plc totaling approximately $66 billion, an increase of 43% over the initial Valeant and Pershing Square offer, prior to the completion of a proxy contest launched by Pershing Square
  • Maintained its industry-leading reputation with doctors and patients as a proponent of long-term R&D in the pharmaceutical sector despite harsh and repeated accusations of mismanagement by Valeant, Pershing Square and their representatives
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