Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failure

Update: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failure
Aug. 17, 2014 1:10 AM ET | About: Valeant Pharmaceuticals International, Inc. (VRX), AGN
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
Summary

Allergan shareholder support for Valeant is below even my expectations. Must be extremely disappointing for Valeant.
Just 12.5 million shares tendered out of the 298 million Allergan shares outstanding. That is just 4.2%.
Pershing Square continues to struggle to gather enough votes for the special meeting, blames it on documentation requirements.
13-F filings show very little Allergan purchased by hedge funds in Q2.
After the market closed on Friday, Valeant Pharmaceuticals (NYSE:VRX) revealed that just 12.5 million Allergan (NYSE:AGN) shares had been tendered. I had suspected the number would be low because they had not provided a running count (or Ackman his "entertaining" running commentary) for the tender offer. But this was far below even my expectations. In my opinion, the tender offer was intended to showcase shareholder support for Valeant's takeover. Instead it has turned into a fiasco.

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The tender offer was opened on June 18th - two months ago. This was the day after Valeant's conference calls with analysts to shore up its stock. I covered the June 17th call in a previous article. The article quotes the many aggressive assurances by Michael Pearson, Valeant's CEO, that there was Allergan shareholder support for Valeant's offer. I had said:

If the deal doesn't happen as I expect it won't, there will be a lot of disappointed Valeant investors because of these numerous assurances from Valeant management.

Getting from 25% to 50% of the votes is much harder. To get to 25%, Valeant needs 1 out of 6 votes (10% from their shell company "PS Fund 1" means that we need 15% from the remaining 90%). But to get to 50% to vote out the board, they would need to get 1 out of 3 of the remaining votes (25% of the remaining 75%).

Thursday's 13-F filings were not encouraging for Valeant. Note that the buys in the 13-F purchases happened in Q2 - well before the "Arbageddon" selloff. So the Q2 portfolios would overstate the amounts held by "event-driven" hedge funds. Despite this, adding up the share counts for the five new hedge funds in the Reuters article comes to just 1.1% of Allergan shares. This article says there were 13 new hedge fund holders of Allergan - but the article also says the total number of Allergan shares held by hedge funds fell by 19%.

Except for Paulson's 2% stake, nothing of any significance has turned up. Note that Paulson has said he would be content even if Allergan makes an acquisition and stays independent.

Ackman's and Valeant's pitches about Valeant's business model have failed despite using many hundreds of slides in their presentations.

Why does Valeant continue to hang on? Maybe they are hoping to settle the lawsuit whose hearing is scheduled for August 20. I hope Allergan doesn't settle - it would deprive us of much entertainment.

 

Re: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failur

This sounds like a David Maris article...

 

Re: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failur

Yes, with those pesky facts and annoying perspective.

 

Re: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failur

This was not a Maris article.

 

Re: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failur

I guess I would be wasting my bandwidth to point out Pershing Square owns almost 10% by themselves. Based on the requirements for reporting, the 4% number has no value.

 

Re: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failur

Exactly!!

 

Re: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failur

Throw in the towel Fat Mike--you lost. Sorry, go find some weak Board to push around. DP told you where to stick your fuzzy accounting and soon the SEC and IRS will too. Good riddance to bad rubbish.

 

Re: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failur

Take note, you just witnessed your CEO lose all credibility. I assume " overwhelming Allergan shareholder support for this deal" would mean more than a 4% tender. But then again we are talking about a company with less than normal accounting practices so let's see how they spin this one. LMFAO!

 

Re: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failur

Fat Mike here....I will not lose. As a matter of fact, things are looking great here, I plan to lay off even more VRX people to jack up the VRX share price. I will come out of all of this looking like a Wallstreet genius, no matter what. I will get richer, my board of directors will get richer, my major stock shareholders, will get richer, so if I have to shirk and bend the rules at any cost, I will, and I will be enjoying my catered in prime rib steak and vintage wine tonight.
Sleep well little peon suckers, I know I will at the top of this mountain I am on!

 

Re: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failur

Pershing Square can't count its shares as the 9.4% won't count towards a tender if a crime was committed by Pershing. That's why the 9% is waiting on the sideline for the CA court case filed by Allergan.

 

Re: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failur

Meanwhile agn is out making its own purchase! Ha

 

Re: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failur

Ackman said he would take 1.22659 shares of Valeant for every Allergan share. So his deal is different and couldn't be part of this tender offer which offers $72 cash and 0.83 Valeant shares.

 

Re: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failur

Completely irrelevant. He can absolutely vote his 9.7% share to get a special meeting. Has nothing to do with how he'll accept funding on the backend should a deal occur.

You're misunderstanding the different mechanisms. He can't vote his shares until after the court case declares his shares legally obtained.

 

Re: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failur

Great--this means he won't be voting!

 

Re: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failur

Test post

 

Re: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failur

how's your 4% looking now, champ? you missed a zero at the end

 

Re: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failur

Exactly. Pershing will deliver another 5% to Allergan this week rendering Ackmans 9.7% a moot point.

 

Re: Valeant's Tender Offer For Allergan - Just 4% Of Shares Tendered In Dismal Failur

Tender offer is alot different than finding 30% of shareholders to vote on a special meeting you dipshits! Totally unrelated!