Mergers & Acquisitions
Goldman’s Unusually Quiet
Role in Battle for Botox Maker
June 12, 2014 11:34 am
is the maker of Botox.
Goldman Sachs is known for successfully
defending its clients against hostile takeover attempts. So it was little
Allergan, the maker of Botox, hired
Goldman to fend off
an unsolicited $53 billion acquisition
But as the
takeover battle heats up, Goldman is curiously taking a back seat to other
consultants in the effort to publicly defend Allergan. When Allergan made a
presentation questioning the value of Valeant stock last month, it was
Alvarez & Marsal and
FTI Consulting – not Goldman – that
performed the analysis.
of firms like Alvarez & Marsal and FTI Consulting is unusual in such a big,
hostile deal. It is typically investment bankers, not outside consultants,
that do this work. Allergan said it hired Alvarez & Marsal and FTI
Consulting because they had expertise in forensic accounting.
may be another reason it is more fitting for those firms, and not Goldman,
to be waging an attack on the value of Valeant’s stock: Goldman was the sole
underwriter for a $2.3 billion offering of new Valeant shares less than a
issued new stock last June, selling 23.5 million shares at $85 apiece as
part of its effort to fund the purchase of
Bausch & Lomb. As underwriter, Goldman
placed those shares with institutional investors, essentially giving the
stock its blessing. What is more, Goldman itself exercised its option to
purchase Valeant shares, buying $300 million worth for itself.
its recent endorsement of Valeant’s stock, Goldman’s new client, Allergan,
is proceeding with an effort to question the worth of those shares.
needs to complete [the] Allergan transaction or another significant
transaction to support its current stock price,” Allergan said in a
presentation filed with the
Securities and Exchange Commission on
day, Allergan’s chief executive, David E.I. Pyott, called into question the
value of Valeant shares. “It’s easy to count U.S. dollars,” he said. “The
rest is much more difficult to value.” And Goldman’s name has not been
mentioned in Allergan’s recent investor presentations, which make the case
against Valeant’s stock.
Goldman underwrote Valeant’s stock, the shares have traded up about 50
percent. Goldman may have comfortably recommended buying Valeant shares at
$85, but there’s no guarantee it would offer them to institutional investors
at $123, Valeant’s current price. Goldman declined to comment.
course, investment banks have multiple lines of business, and occasionally
work for clients with divergent interests. Different teams at Goldman
handled the Valeant underwriting and the Allergan defense.
Goldman’s enthusiastic support of Valeant’s stock less than a year ago
stands in contrast to its alliance with a team that is now talking down the
value of those same shares.
other ties to Valeant as well. It also advised Bausch & Lomb on its sale to
Valeant, then provided Valeant with committed financing to complete the
deal. And Howard B. Schiller, Valeant’s chief financial officer, was at
Goldman for 24 years, rising to chief operating officer of the investment
other advisers working on its defense against Valeant.
Bank of America
Merrill Lynch is working alongside
Goldman, and the law firms Latham & Watkins, Richards, Layton & Finger, and
Wachtell, Lipton, Rosen & Katz are providing legal advice.
meanwhile, has recently hired
Morgan Stanley to assist in its hostile
approach, according to people briefed on the matter. Morgan Stanley joins
Barclays and RBC Capital Markets as
financial advisers to Valeant, while Sullivan & Cromwell, Skadden, Arps,
Slate, Meagher & Flom, and Osler, Hoskin & Harcourt are providing legal
June 9th, 2014
William A. Ackman
answers why he thinks Valeant’s potential takeover of Allergan is
beneficial, and the “unprecedented” terms behind the hostile bid.
Stanley was brought on because Valeant and the hedge fund manager William A.
Ackman, who is working with Valeant on the bid, believed until recently that
Allergan might be willing to negotiate a friendly transaction. But with
Allergan’s formal rejection of Valeant’s offer this week, it became clear
that the effort was headed for a special meeting, where Valeant will seek to
replace the Allergan board.
Stanley has advised on numerous hostile approaches, and has joined the fray
late in the game before. When
Sanofi-Aventis was making a hostile bid
for Genzyme in 2010, which it eventually won, Morgan Stanley was brought on
well into the process.
probably be months more before a special meeting of Allergan shareholders is
called. In the meantime, Valeant, advised by Morgan Stanley and others, will
keep waging its hostile takeover effort in one of the most intriguing deals
of the year. And Allergan, advised by Goldman’s expert defense teams, will
continue questioning the value of Valeant’s stock.
The New York Times Company