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M&A – New Rules in the Game: @Tulane University’s Law School, M&A Conference – Allergan Inc.’s $66 billion sale to Actavis PLC

Reporter: Aviva Lev-Ari, PhD, RN

The deal, Allergan Inc.’s $66 billion sale to Actavis PLC, closed on 3/22/2015, ahead of schedule and 11 months after Valeant Pharmaceuticals International Inc. and activist William Ackman’s hedge-fund firm had first gone public with an Allergan bid.

“We all knew that this fight was special—very large in import, dollars and personalities,” Ms. Frank said

Public-relations marshal Joele Frank

The Hero:

Latham & Watkins LLP partner Paul Tosetti, who advised Allergan

New Features of this M&A:

• gray area for the SEC, which oversees disclosures to shareholders and solicitation of votes.
• a “shareholder referendum”—essentially a straw poll of Allergan shareholders—that Valeant and Pershing Square tested out, an effort to rally Allergan shareholders to press the board to talk with Valeant without violating the company’s complex bylaws
• Allergan’s advisers privately pressed the SEC to weigh in on the “shareholder referendum”

• If SEC would have allowed the ultimately abandoned effort to go through — the rally informal shareholder support within the SEC’s defined solicitation framework “could give the disputed materials a form of official imprimatur.”

• How far corporate bylaws can go in fending off takeover bids. Allergan’s bylaws, which imposed many requirements on anyone seeking board seats

Allergan’s main legacy

• Validation of stall tactics – in eight months, Allergan’s Advisors went out and found the deal with Actavis
• Advisers weighed whether Valeant or another buyer would revive the hedge-fund tandem bid
• SEC’s merger chief, Michele Anderson, said on a panel: Valeant’s decision to launch a tender offer was a misstep, acknowledge in private by Pershing Square Capital Management LP

SEC Rules for Tender Offers with and without appeals to shareholders to sell their stock

Tender offers, which are direct appeals to shareholders to sell their stock, are governed by stricter SEC rules than other takeover efforts, particularly regarding the use of inside information.

Pending securities litigation against Pershing Square and Valeant, alleging insider-trading violations

• Discourage copycats
• Structure could be reused successfully as Partnerships between Hedge Funds and Corporate Tender or Hostile M&As

 SOURCE

http://blogs.wsj.com/moneybeat/2015/03/24/talking-allergan-at-tulane-a-horse-choker-the-shamarendum-and-more/#?mod=wsj_valettop_email