Another hedgie joins botox takeover battle

Valeant Pharmaceutical's battle for botox maker Allergan is starting to look like a hedge fund love-in.

At least four hedge funds have now formed something of a united front, speaking up publicly in favor of the $53 billion acquisition of Allergan by Valeant. The latest is Pentwater Capital, an Allergan shareholder whose CEO Matt Halbower wrote a scathing letter to its board Thursday.

Pentwater, which owns over 3.9 million shares of Allergan, protested Allergan's possible acquisition of another company to avoid falling into Valeant's clutches.

The letter comes days after reports surfaced that the Allergan board was close to sealing an all-cash deal with Salix Pharmaceutical, a $12 billion transaction that could preclude an upcoming shareholder vote and hurt Valeant's chances of buying the company.

"Pentwater is strongly opposed to the board of Allergan agreeing to any significant acquisition that does not allow shareholders to vote," wrote Halbower. He added that such a deal would "destroy value for all Allergan shareholders."

Halbower also complained about Allergan's "destructive action" regarding suitors interested in buying it.

The Canadian pharmaceutical company Valeant apparently isn't the only one that has approached Allergan, he noted. Actavis, another drugmaker, also reportedly has been spurned by Allergan.

"Despite receiving two premium bids, Allergan's board has refused to engage with either bidder," Halbower said. "This type of shareholder destructive action has led over 35 percent of Allergan's shareholders to request a special meeting to remove Allergan's current directors."

"Pentwater does not understand how Allergan's directors could possibly conclude it is an appropriate exercise of their fiduciary duty to embark on such a large scale acquisition without first engaging with Valeant and Actavis," Halbower added.

Allergan's biggest shareholder, Bill Ackman's Pershing Square, is backing Valeant and organized the special shareholders meeting, which Allergan last week finally promised to hold on Dec. 18. When the news of a potential Salix deal emerged, Ackman quickly threatened to sue.

Ackman and John Paulson, a major investor in both Valeant and Allergan, have long been keen on the deal. But news of a possible Allergan-Salix combo seems to have spurred other hedgies to speak out.

Earlier on Thursday ValueAct's Jeff Ubben, a big Valeant shareholder, joined its board and endorsed the union.

It's unclear if the threat of an Allergan-Salix deal is real. After being spurned by Allergan, Actavis is also said to be exploring buying Salix, whose talks with Allergan are believed to have stalled.

But, given Allergan's belligerence, the hedge funds are taking no chances. "The actions of Allergan's board have grown increasingly hostile towards its own shareholders," said Halbower.

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