Published On: Fri, Sep 5th, 2014

John Paulson Adds Battleground Stock Allergan

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Fund manager John Paulson added a new position in controversial stock Allergan, which is the object of a hostile takeover bid by Valeant Pharmaceuticals. The Allergan position now accounts for 4.11% of Paulson’s portfolio.

Canadian drugmaker Valeant, with the backing of hedge fund manager Bill Ackman, has made a hostile takeover for the Botox maker. Ackman created a 9.7% stake in Allergan, and has been pushing Allergan to accept the bid, which Allergan management says “grossly undervalues” the company. Allergan has fought back against Valeant, filing a lawsuit in August, claiming that Valeant and Ackman violated laws forbidding insider trading and engaged in fraudulent practices. In addition, Allergan CEO David Pyott pointed out that Valeant is like a Pac-man, eating up companies, but lacking a sustainable growth plan for acquisitions and piling up huge debt.

Allergan’s suit follows previous lawsuit by Bill Ackman and Valeant trying to force Allergan’s shareholders to hold a special meeting to discuss the acquisition. In spite of all of this turmoil, Allergan’s stock has been performing well, with a 23.8% increase in non-GAAP earnings per share for 2Q, with pharmaceutical sales increasing 13.2% and medical devices, by 25.8%

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