The pharmaceutical industry is regaining its swagger, Michael J. de la Merced, David Gelles and Rachel Abrams write in DealBook. On Tuesday alone, pharmaceutical companies announced $74 billion worth of potential deals, including an unconventional $45.6 billion bid for Allergan, the maker of Botox, and a flurry of swaps and sales between Novartis of Switzerland and GlaxoSmithKline of Britain. More deals in the cash-rich industry are expected.
The wave of deals underscores the most extensive effort yet by drug makers to bolster their businesses, in many cases pursuing growth as onetime blockbuster products lose patent protection. Instead of spending money researching new products, several companies are instead looking to buy likely winners. Indeed, some drug makers see deal-making as a normal course of business. Among them is Valeant, a Canadian pharmaceutical company known as a serial acquirer, which on Tuesday unveiled its unsolicited takeover bid for Allergan.
Valeant’s current approach has raised eyebrows, since it has teamed up with William A. Ackman, a brash hedge fund mogul known to fight loudly for change at corporations. Combined, Allergan and Valeant would have annual sales of more than $15 billion, with $2.7 billion in cost savings. At Valeant’s single-digit tax rate, that could be worth $25 billion. Both Mr. Ackman and J. Michael Pearson, Valeant’s chief executive, estimated that a combined company would be valued at more than $200 a share.
Robert Cyran and Richard Beales of Reuters Breakingviews write: “Remember the dawn raid, when a would-be acquirer built up a stake before the target realized it was under attack?†Mr. Ackman “has come up with a kind of drone strike version.†By teaming up with Valeant, Mr. Ackman and his hedge fund, Pershing Square Capital Management, can skip the step in which, after buying a stake in a company he thinks is ripe for a shake-up, he then tries to make something happen. Instead, they write, he already has a ready-made buyer.
NEW TERRITORY FOR TAKEOVERS?  | “The $45.6 billion unsolicited offer for Allergan by Valeant Pharmaceuticals and William A. Ackman’s hedge fund is many things including bold, novel and mega in all ways,†Steven M. Davidoff writes in the Deal Professor column. “It is a new twist in the struggle between companies and shareholder activists and could ignite a furious battle not just for Allergan but over the laws governing takeovers and activism.â€
By teaming up with Mr. Ackman’s hedge fund, “Valeant may have unleashed a monster,†Mr. Davidoff writes. “Activists and corporations may team up on hostile takeovers, but the companies that join with activists may soon discover they are targets themselves.†And, he adds, the pairing will also increase pressure on private equity firms to become more like activist hedge funds.
DOUBTS RAISED IN INSIDER CASE  | Preet Bharara’s perfect record is in jeopardy, Ben Protess and Matthew Goldstein write in DealBook. Mr. Bharara, the United States attorney in Manhattan, has won 80 insider trading convictions without a single defeat, but on Tuesday, a federal appeals court in Manhattan raised doubts about the government’s case against two former hedge fund traders, Todd Newman and Anthony Chiasson.
During the hearing, the judges implied that Mr. Bharara’s office steered insider trading trials to Judge Richard J. Sullivan, who oversaw Mr. Chiasson’s and Mr. Newman’s trial and a subsequent case against another trader. And the defense lawyers contended that Judge Sullivan’s instructions ran afoul of a 30-year United States Supreme Court ruling that helped define insider trading. The lawyers have argued that the flawed instruction warrants a new trial, if not having the convictions thrown out all together.
“A victory for Mr. Chiasson and Mr. Newman would offer a blueprint for traders to defend future cases and imperil at least one other milestone conviction: Michael Steinberg, of SAC Capital Advisors, the once-mighty hedge fund that Mr. Bharara indicted last year,†Mr. Protess and Mr. Goldstein write. But the appeal, they add, is hardly a slam dunk. For one, the United States Court of Appeals for the Second Circuit is known for siding with the government and has rejected every other insider trading appeal filed during Mr. Bharara’s tenure.
ON THE AGENDA  | The Purchasing Managers’ Manufacturing Index is out at 9:45 a.m. New home sales for March are released at 10 a.m. Facebook and Apple report earnings after the market closes. Mohamed A. El-Erian, formerly chief executive and co-chief investment officer of Pimco, is on Bloomberg TV at 9:30 a.m.
COMCAST LOOKS TO DIVESTITURES Â |Â Comcast is seeking to divest nearly four million subscribers as part of its efforts to appease antitrust regulators scrutinizing the proposed acquisition of Time Warner Cable, David Gelles writes in DealBook. In one likely situation, Charter Communications would buy about 1.5 million subscribers from Comcast. Charter would also swap some subscribers with Comcast, including those in the Los Angeles area, allowing Comcast to consolidate its footprint there. In addition, Comcast would spin off a new public company with about 2.5 million subscribers.
Together, the sale of subscribers and a spinoff is expected to deliver $18 billion to $20 billion to Comcast, which it could use to buy back shares and pay down the debt it will take on to complete the deal for Time Warner Cable. Even without its planned acquisition, Comcast is growing. The cable operator reported strong first-quarter earnings on Tuesday, including revenue that was up 13.7 percent from the period a year earlier, to $17.4 billion. It also added 24,000 television subscribers.
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WhatsApp Hits 500 Million Users  | WhatsApp, the messaging application recently scooped up by Facebook for up to $19 billion, now has 500 million active monthly users, with 48 million active users in India alone, ReCode reports. RECODE
Investors Back Citigroup Pay  | Big shareholders voted in favor of Citigroup’s executive pay plans for 2013 at the bank’s annual meeting in St. Louis on Tuesday, The Financial Times writes. Some investors voiced their displeasure at the bank’s failure to pass the Federal Reserve’s annual stress test. FINANCIAL TIMES
Is Citigroup Too Complex?  | Michael E. O’Neill, the chairman of Citigroup, and Michael L. Corbat, the bank’s chief executive, acknowledged on Tuesday at the annual meeting that the company must do more to simplify itself, Reuters writes. REUTERS
Report Hints at More Job Cuts at Barclays  | The British bank Barclays could eliminate 7,500 jobs at its investment bank to improve returns at its securities unit, according to a report by Sanford C. Bernstein, Bloomberg News writes. BLOOMBERG NEWS
Ardian Raises $10 Billion, Mostly to Invest in Buyout Funds  | In its latest round of fund-raising, the private equity firm Ardian, formerly AXA Private Equity, outpaced the $8 billion it raised in 2012. Ardian was spun off from the French insurer AXA Group last year. DealBook »
Einhorn Betting Against Tech  | Greenlight Capital, the hedge fund run by David Einhorn, said in its quarterly letter to clients on Tuesday that it was shorting a group of technology stocks as evidence of a bubble mounted, Bloomberg News writes. BLOOMBERG NEWS
Corporate Governance in Silicon Valley Under Fire  | Jeff Ubben, whose hedge fund ValueAct is a leading investor in Microsoft, eBay and Adobe Systems, criticized what he said was excessive compensation for Eric Schmidt, the chairman of Google, The Financial Times writes. FINANCIAL TIMES
Darden Shareholders Said to Consent to Special Meeting  | The hedge fund Starboard Value won consent on Tuesday from shareholders of Darden Restaurants to hold a special meeting on Darden’s proposal to spin off its Red Lobster chain, CNBC reports, citing unidentified people familiar with the situation. CNBC
Numericable Set to Price Largest Ever Junk Bond Offering  | Numericable, the French cable unit of Altice, is expected on Wednesday to price a junk bond offering worth about 8.4 billion euros, or almost $12 billion, to help finance the acquisition of Vivendi’s mobile unit, SFR. DealBook »
Ares I.P.O. Likely to Raise Up to $419 Million  | The investment firm Ares Management said on Tuesday that it expected to raise up to $419 million in its initial public offering, Reuters writes. REUTERS
If a Bubble Bursts in Palo Alto, Does It Make a Sound?  | Silicon Valley’s isolation from the rest of the economy guarantees it can’t hurt us (or help us) much, Annie Lowrey writes in The New York Times Magazine. NEW YORK TIMES MAGAZINE
Weebly Raises $35 Million  | Weebly, which helps people and companies build websites, has raised $35 million from Tencent and Sequoia Capital, giving it a valuation of $455 million, ReCode reports. RECODE
Dorian Nakamoto Appears to Thank Bitcoin Community  | Dorian Nakamoto, the man Newsweek identified last month as the creator of Bitcoin, thanked the Bitcoin community and again denied being behind the virtual currency in a video posted on YouTube on Tuesday, TechCrunch reports. TECHCRUNCH
Justices Skeptical of Aereo’s Business  | The Supreme Court signaled on Tuesday that it was struggling with two conflicting impulses in considering a request from television broadcasters to shut down Aereo, an Internet start-up that uses arrays of small antennas to stream over-the-air signals to subscribers. Most of the justices suggested that the service was set up to circumvent the law, but they were also clearly concerned about stifling innovation, The New York Times writes. NEW YORK TIMES
At Stake in the Aereo Case Is How We Watch TV Â |Â The case has a little bit of everything, including the first big test at the Supreme Court of who owns and has rights to things stored in the cloud, David Carr writes in the Media Equation column. NEW YORK TIMES
New York’s Case Against Airbnb Is Argued in Albany  | Eric T. Schneiderman, the New York State attorney general, has issued a subpoena for Airbnb’s list of hosts in New York City because he thinks some of them are breaking the law. It is illegal in New York to rent an apartment for less than 30 days, The New York Times writes. NEW YORK TIMES
