William A. Ackman, one of the brashest men on Wall Street, has come up with perhaps the boldest move yet for an activist: He has teamed up with the health care company Valeant to bid roughly $50 billion for Allergan, the maker of Botox, David Gelles, Michael J. de la Merced and Alexandra Stevenson write in DealBook. The offer by Valeant is expected to be announced Tuesday morning.
“If successful, the joint bid by a hedge fund and a corporate acquirer could provide a new template for how deals are done in an era of increased activity by activist investors,†they write. “But the proposed acquisition, the first of its kind, also raises pressing questions about how activists and corporations work together and how companies defend themselves against hostile bidders. It also opens up potential new conflicts of interest.â€
Regulatory filings show that over the last two months, PS Fund 1, a part of Mr. Ackman’s Pershing Square Capital Management, has been acquiring shares of Allergan, amassing a 9.7 percent stake in the company, worth more than $4 billion. At the same time, Valeant, a health care company based in Quebec that is worth $42 billion, had agreed to pursue a joint bid for Allergan alongside Pershing Square. According to filings, Valeant contributed $76 million to PS Fund 1 and committed to work with Pershing Square on a joint bid for all of Allergan.
Valeant is no stranger to deal-making. The company’s $2.6 billion purchase of Medicis in 2012 bolstered its presence in dermatology and cosmetic treatments, and its $8.7 billion acquisition last year of Bausch & Lomb gave it a big presence in eye care. A deal for Allergan would be its largest yet.
NOVARTIS UNVEILS RESTRUCTURING Â |Â The Swiss pharmaceutical giant Novartis announced a major overhaul of its operations on Tuesday, marked by an agreement to buy the cancer drug business of its British rival GlaxoSmithKline for up to $16 billion, Chad Bray and Neil Gough write in DealBook.
As part of its restructuring, Novartis said it would sell its vaccine business to GlaxoSmithKline for $7.1 billion and combine its over-the-counter pharmaceutical business with GlaxoSmithKline’s consumer drug business. Novartis also said it had agreed to sell its animal health division to Eli Lilly and Company for $5.4 billion and that it would put its flu vaccine business up for sale. The deals would allow Novartis to focus on higher-margin businesses, while staying active in the over-the-counter market.
ASTRAZENECA REBUFFS PFIZER  | In other pharmaceutical company news, AstraZeneca said no to a deal with Pfizer, turning down the possibility of one of the biggest drug mergers in the last few years, Michael J. de la Merced and Andrew Pollack write in DealBook. “Whether such a deal would have made sense is another matter, because the British drug maker is trying to improve its fortunes on its own and Pfizer in the past has found that big acquisitions can sometimes prove more distracting than helpful,†they write.
In recent months, Pfizer is said to have made a number of informal takeover approaches to AstraZeneca. One valued the smaller pharmaceutical company at about £60 billion, or nearly $100 billion, which would be one of the biggest ever in the pharmaceutical industry. Pfizer, which may view AstraZeneca as attractive because of its portfolio of cancer drugs, would probably have used some of the cash and short-term investments on its balance sheet as part of the deal. A takeover of AstraZeneca would also have made use of cash that Pfizer holds overseas.
But rather than seek out a merger partner, AstraZeneca has been trying to improve its fortunes on its own over the last few years. In 2012, the company named Pascal Soriot, formerly the head of pharmaceuticals at Roche, as its new chief executive. Mr. Soriot has been trying to cut costs, speed up decision-making and focus drug development on selected diseases. The company has also made a number of small acquisitions to bolster its pipeline.
ON THE AGENDA  | The Federal Housing Finance Agency house price index for February is out at 9 a.m. Existing home sales for March are released at 10 a.m. The Richmond Fed manufacturing index is out at 10 a.m. The Supreme Court will hear arguments in the Aereo case. Comcast reports first-quarter earnings before the bell. Today is Earth Day. Don’t forget to admire the trees.
BOSTON STRONG  | One year after two bombs exploded near the finish line of the Boston Marathon, the city triumphantly reclaimed its finish line. Meb Keflezighi became the first American in three decades to win the men’s race. “I did it for Boston,†he said.
BARCLAYS LATEST TO LEAVE COMMODITIES  | The British bank Barclays is set to announce that it plans to exit large parts of its commodities business, Jenny Anderson writes in DealBook. The move comes as large investment banks â€" including JPMorgan Chase, Deutsche Bank and Morgan Stanley â€" are leaving the business in the face of increasing regulatory scrutiny and falling profits.
Barclays, among the top five banks in the commodities business that control much of the global market, plans to eliminate a number of jobs, adding to the tally of layoffs from a broad restructuring. The bank will either shut down or sell much of its metals, energy and agricultural commodities business, according to an unidentified person with knowledge of the plan. Precious metals trading will be folded into foreign exchange trading.
Â
For Square, Making Money Remains a Challenge  | Companies already collect payments when a customer swipes a credit card. The question, analysts say, is how a start-up like Square can make itself into more than just another middleman. DealBook »
Netflix Says It Opposes Comcast’s Merger Bid  | Netflix voiced strong opposition on Monday to Comcast’s planned $45 billion takeover of Time Warner Cable, even while confirming that it was raising subscription prices for its services in the United States by $1 to $2 a month, Michael J. de la Merced writes in The New York Times. NEW YORK TIMES
Be Wary of a Big Mining Merger  | Barrick Gold is said to be interested in a deal with a rival, Newmont Mining. Barrick’s chairman will need to persuade shareholders that such a merger would not be another value-destroyer, Kevin Allison of Reuters Breakingviews writes. DealBook »
Felix Salmon to Leave Reuters  | Felix Salmon, a prominent writer on finance and the news media, declined to release details of his new job, The New York Times reports. NEW YORK TIMES
Goldman Sachs Trying to Restore Its Shine  | “Over the past few quarters something strange has happened: Goldman is starting to look unexceptional,†Tom Braithwaite writes in The Financial Times. FINANCIAL TIMES
Former Barclays Executive Sees ‘Golden Decade’ for Banking  | Hans-Joerg Rudloff, a former chairman of investment banking at Barclays, said in an interview that the world’s securities firms were set for 10 years of growth, Bloomberg News reports. BLOOMBERG NEWS
Group Led by TPG to Buy Health Care Company for $461 Million  | The offer for Chindex International, an American company that does business in China, is for $24 a share in cash from a group of investors that outbid a rival. DealBook »
K.K.R.’s Acquisition of an Affiliate Encounters Opposition  | The plan by Kohlberg Kravis Roberts to acquire KKR Financial Holdings is opposed by an organization that advises union pension funds, but others are supporting it. DealBook »
2 Italian Banks to Set Up Bad Loan Vehicle With K.K.R. Â |Â UniCredit and Intesa Sanpaolo are teaming up with the private equity firm Kohlberg Kravis Roberts and Alvarez & Marsal, a restructuring adviser, to pool some of their bad loans into a vehicle that would provide fresh capital for the banks, The Financial Times writes. FINANCIAL TIMES
Supreme Court Weighs Aid to Holders of Argentine Debt  | Holders of defaulted Argentine bonds are seeking subpoenas to document its assets and collect on court judgments, The New York Times writes. The justices will soon decide whether to hear a second and more significant case arising from Argentina’s 2001 default on billions of dollars of debt. That case is an appeal by Argentina of a lower court’s decision in favor of hedge funds that held about $1.3 billion in Argentine bonds. NEW YORK TIMES
Good News for Oil Bulls?  | The price of gasoline is rising, with the nation’s stockpiles at the lowest point at this time of year since 2011, The Wall Street Journal writes. But the potentially bad news for consumers could be good news for oil bulls, including hedge funds and other managers, who have been struggling against the rising tide of United States oil output since the start of 2011. WALL STREET JOURNAL
Don’t Pity the Hedge Fund Manager  | Hedge fund assets under management hit a record in the first quarter, according to the industry tracker HFR, The Wall Street Journal writes. Hedge funds now manage $2.7 trillion, nearly double their total from 2008. WALL STREET JOURNAL
Card Factory Joins British I.P.O. Rush  | Card Factory, a budget greeting card specialist, revealed plans to raise 90 million pounds in an initial public offering in London, The Financial Times writes. FINANCIAL TIMES
Weibo’s Second Day Surge  | Weibo, the Chinese microblogging site often compared with Twitter, surged nearly 12 percent on its second day of trading, Forbes writes. FORBES
Worst Week for I.P.O.s in a Decade? Â |Â Eight of the 10 companies that went public in the United States last week priced below their expected range, the most in a single week since July 2004, according to Dealogic, The Wall Street Journal writes. WALL STREET JOURNAL
GitHub Founder Resigns After Investigation  | Tom Preston-Werner, a co-founder and former chief executive of GitHub, a website for sharing and collaborating on software code, resigned on Monday after an investigation into gender-based harassment, the Bits blog reports. GitHub has raised $100 million from the venture firm Andreessen Horowitz. NEW YORK TIMES BITS
InBloom Student Data Repository to Close  | The student data warehousing venture that became a lightning rod for some parents’ data privacy and security concerns announced it would close, the Bits blog writes. NEW YORK TIMES BITS
HBO Renews ‘Silicon Valley’ and ‘Veep’  | HBO announced on Monday that it had renewed its two Sunday night half-hour comedies, “Silicon Valley†and “Veep,†The New York Times writes. NEW YORK TIMES
Beats Music Raising Another Funding Round  | The music service Beats Music, started by Jimmy Iovine and Dr. Dre, is closing a new funding round valued at up to $100 million, Billboard writes. BILLBOARD
Companies Built on Sharing Balk When It Comes to Regulators  | Regulators and elected officials are increasingly questioning the presumptions and tactics of rental and ride-sharing start-ups like Airbnb, Uber and Lyft, The New York Times writes. NEW YORK TIMES
Focus Turns to Samsung’s Patents at Trial  | Samsung said on Monday that Apple had copied some technology, including a method for transmitting video over wireless devices. NEW YORK TIMES BITS
Is Aereo in Peril? Â |Â Fortune provides an explainer on why the Supreme Court may pull the plug on Aereo, a disruptive wireless technology that brings broadcast television to smartphones. FORTUNE
Skeptical Justice Scolds Coca-Cola on Juice Label  | A lawyer for Coca-Cola remained poised under sometimes harsh questioning on its Pomegranate Blueberry juice blend, which contains only notes of either fruit, The New York Times reports. NEW YORK TIMES
