The Morning Brief: Valeant Ups Its Allergan Bid
Valeant Pharmaceuticals International raised its hostile offer for Allergan Inc. The drug giant, which is teaming up with activist hedge fund Pershing Square Capital Management, lifted the cash component of its offer by $10 per share, to $58.30, while keeping its original offer of 0.83 of a Valeant share. This package now works out to a value of $166.16 per share. Valeant is also adding a contingent value of as much as $25 a share if Allergan meets certain sales goals on its eye drug Darpin. Its earlier offer was valued at about $152.89 a share. Separately, Valeant announced it sold rights to certain skin-care products to Nestle SA for about $1.4 billion, designed to make it easier for a deal with Allergan to clear antitrust hurdles. In response, Allergan said in a press release it received Valeant’s new offer and that its board “will carefully review and consider” the new offer.
Matthew Teeple, a former analyst for Artis Capital Management, pleaded guilty to a charge of criminal conspiracy to commit securities fraud stemming from an insider trading scandal. Teeple received confidential information from David Riley, a former chief information officer at Foundry Networks Inc, including information related to the company’s $3 billion acquisition by Brocade Communications Systems Inc. in 2008, according to the government. Teeple then passed this information on to John Johnson, the former chief investment officer of the Wyoming Retirement System, who traded on it. Johnson had pleaded guilty last year to one count each of securities fraud and conspiracy. Riley, who pleaded not guilty, is scheduled to go on trial in July. Teeple faces a maximum of five years in prison.
Tiger Global Management liquidated its entire stake in Carter’s, the maker of children’s clothing. At the end of the first quarter, the hedge fund firm headed by Charles “Chase” Coleman and Feroz Dewan had a stake worth more than $503 million, its third largest holding at the time.
Shares of shoe retailer DSW plunged more than 27 percent on Wednesday after CEO Mike MacDonald told analysts the rest of the year won’t be nearly as good as they had been anticipating. At the end of the first quarter, Stephen Mandel, Jr.’s Lone Pine Capital was the second largest shareholder, although it was not a major holding of the hedge fund firm. Other major hedge fund shareholders include Hoplite Capital Management, founded by former Tiger Management analyst John Lykouretzos, and Kenneth Griffin’s Citadel Advisors.