The Morning Brief: Allergan Rejects Valeant/Pershing Square Bid

Allergan officially rejected Valeant Pharmaceuticals International’s hostile tender offer, asserting in a press release that it “substantially undervalues the company, creates significant risks and uncertainties for Allergan stockholders, and is not in the best interests of the company and its stockholders.” It recommended that shareholders not tender their shares to Valeant, which has grown rapidly over the years, mostly from acquisitions. Valeant and hedge fund manager William Ackman of Pershing Square Capital Management have teamed up on the bid.

In a press release, Allergan elaborates that Valeant’s stock and cash offer values the company at $173.20 per share, based on the closing price of Valeant’s stock on June 20, “which is substantially lower than the initial $179.25 per share implied value” of Valeant’s May 30 “re-revised proposal,” which also included a contingent value right that Allergan stresses is not included in the new exchange offer. Stay tuned for the next move by Valeant and Pershing Square.

Michael Balboa, a former portfolio manager for the London-based Millennium Global Emerging Credit Fund, was sentenced to four years in prison for inflating the value of certain assets in the hedge fund. He also was sentenced to three years of supervised release and ordered to forfeit $2.23 million and pay restitution of more than $390 million. The Millennium fund is not related to Israel “Izzy” Englander’s New York-based hedge fund firm, Millennium Management. In December Balboa was found guilty of conspiring to commit securities fraud, conspiring to commit wire fraud, and with committing securities fraud, wire fraud, and investor adviser fraud. A previous trial ended in a mistrial. According to the government, Balboa “provided inflated prices” for a “Nigerian oil warrant” and instructed two other individuals to participate in the scheme.

A West Palm Beach, Fla.-based hedge fund advisory firm, its founder and two other individuals settled civil charges with the Securities and Exchange Commission stemming from accusations they illegally moved client money from one investment to another without authorization and pocketed some of the money. According to the SEC, Albert Hallac, founder and president of Weston Capital Asset Management, and former general counsel, chief compliance officer, and chief operating officer Keith Wellner “illegally drained more than $17 million” from a hedge fund they managed and illegally moved it to a consulting and investment firm. They then sent out false statements that showed the investment was “performing as well or even better than before,” according to the SEC. The third individual, Hallac’s son, was named as a relief defendant so the SEC could recover illegally obtained gains he held. Wellner and Jeffrey Hallac each agreed to pay $120,000 in disgorgement.

Tiger Global Management disclosed that it owns 18.6 percent of Zhaopin Limited, a Chinese online recruitment services company that went public June 12 at $13.50 per share. The stock, which rose 2 percent in the regular trading session Monday, jumped another 2.5 percent, to $15, in after-hours trading. The regulatory filing indicates the investment is passive.

Omega Advisors’ Leon Cooperman disclosed he owns 21.8 percent of Nordic American Offshore, an owner of platform supply vessels to service offshore oil platforms. The stock, which also began trading on June 12, surged more than 13 percent Monday after Cooperman’s filing, which was curiously made in a 13D form, although he stated he has no current plans for the company. Nordic American Offshore also announced Monday it had ordered two new vessels, boosting its fleet to 10.