William A. Ackman’s unconventional hostile bid for the maker of Botox has surprised corporate America and brought out some unexpected alliances.
The $45.6 billion bid for Allergan by Mr. Ackman’s hedge fund and the health care company Valeant raised questions about a conflict of interest when activist investors and corporations work together. A news analysis in DealBook said the bid may have exploited a loophole in the rules for insider trading.
To ensure that the potential deal will win approval from regulators, Mr. Ackman has turned to Robert Khuzami, the former head of enforcement at the Securities and Exchange Commission who is now a partner at Kirkland & Ellis. At the S.E.C., Mr. Khuzami was known as an aggressive regulator, and he opened a special unit focused on hedge fund returns. Now as a Wall Street lawyer, Mr. Khuzami has verified that buying 9.7 percent of Allergan while preparing a hostile bid did not violate the S.E.C.’s rule on insider trading.
But the most surprising ally that Mr. Ackman has gained may be his former activist adversary Carl C. Icahn. Mr. Ackman has battled him, along with Daniel S. Loeb and George Soros, over Herbalife, the nutritional supplements company. Mr. Ackman has made a $1 billion bet against the company, which he contends is a pyramid scheme.
After calling Mr. Ackman “a crybaby in the schoolyard†last year, Mr. Icahn said this week that “we have our differences, but I never said he’s not a smart guy.â€
“I never thought I’d be defending him, but I don’t think there’s anything wrong with that,†Mr. Icahn said when asked about the bid for Allergan during an interview on CNBC this week. The billionaire investor added that he would consider following in Mr. Ackman’s footsteps and partnering with a company for his own takeover bid.
“Any activism is good as long as it’s legal,†Mr. Icahn added.
A look back on our reporting of the past week’s highs and lows in finance.
THURSDAY
Bare Knuckles at Auction House | DealBook »
Justice Dept. Seeks Deal With Bank Over Loans | DealBook »
Zimmer Holdings to Buy Biomet for $13.35 Billion | DealBook »
K.K.R. Profit Falls, but Tops Estimates | DealBook »
New Evidence May Reopen Broker Fraud Case | DealBook »
WEDNESDAY
Strict Cost-Cutters Who Want to Spend $45 Billion on Takeover | DealBook »
New York Financial Regulator Uses Dodd-Frank to Sue Auto Lender | DealBook »
Investors Bet on Live-Streamed Spinning Classes in the Home | DealBook »
Seeking to Grow, Chobani Secures $750 Million Loan | DealBook »
TUESDAY
Appeal Judges Hint at Doubts in Insider Case | DealBook »
Mergers on the Rise for Drug Makers Chasing Growth | DealBook »
Top Italian Banks Tap Private Equity for Help With Troubled Loans | DealBook »
Novartis and Glaxo Agree to Trade $20 Billion in Assets | DealBook »
Deal Professor: Allergan Bid Charts New Territory in Corporate Takeovers | DealBook »
MONDAY
Unusual Hostile Bid for Maker of Botox | DealBook »
Barclays Said to Join Commodity Exodus | DealBook »
WEEK IN VERSE
‘I Put a Spell On You’ | If Screamin’ Jay Hawks can record this while drunk then, Carl Icahn can give financial advice while sipping champagne. YouTube »
