Plenty of billionaires have become personally familiar with Botox, the wrinkle-killing drug. Activist hedge fund investor Bill Ackman may soon have an even closer relationship -- as an owner.
According to a Wall Street Journal report, Ackman's Pershing Square Capital is "teaming up" with Valeant Pharmaceuticals to pursue a takeover of Botox-maker
Allergan, up 6% in trading during the day, rocketed 17% in after hours trading on the news. Valent is also up about 11% after hours. Allergan and Valent are similarly-sized, with about $42 billion in market capitalization.
According to the Journal report, Ackman has already built up nearly a 10% stake in Allergan, worth about $4 billion -- making it his biggest investment ever. If so, he's do so quickly and quietly. As of Allergan's most recent proxy statement just a month ago, no entity associated with Ackman reported owning more than 5% of the company's shares.
UPDATE: According to an SEC filing released shortly before 5pm on Monday afternoon, Pershing Square has accumulated 9.7% of outstanding Allergan stock, or 28.9 million shares (including nearly 25 million call options and 3.5 million shares underlying forward purchase contracts). Technically, the shares are held by a new jointly-owned entity between Pershing and Valeant called PS Fund 1.
The entity is designed to dissolve after a successful acquisition, at which time Pershing Square will invest $400 million in shares of Valeant stock at a 15% discount to the per share market price.
Montreal-based Valeant has pursued a roll up strategy in recent years, buying its way into the top of the pharmaceutical business. Last year it purchased Bausch & Lomb for $8.7 billion. Before that, it acquired Medicis for $2.6 billion. Valeant's CEO Mike Pearson has said that it's his goal to be among the world's five biggest drugmakers within the next few years.
