How Billionaires Stack Up in Bill Ackman's Big Allergan Bid

NEW YORK (TheStreet) -- A multi-billion-dollar takeover bid for Allergan (AGN) has been Bill Ackman's biggest play of 2014.

The Pershing Square head teamed up with Valeant  (VRX) at the start of the year to initiate a hostile takeover of the Botox maker. And with AGN comprising 38% of his equity portfolio in the second quarter, for Ackman the stakes couldn't be higher.

In case you missed it, here's a quick look at the timeline:


Credit: Emily Stewart

But Bill Ackman isn't the only one with an interest in how the Allergan-Valeant battle plays out. In fact, a number of billionaire investors are caught in the crossfire.

Valeant. As of its most recent 13F filings, released in August, Steve Mandel, Jorge Lemann, George Soros, John Paulson and Richard Chilton have positions in Valeant, as does Thomas Steyer's fund, Farallon Capital. With 10.1 million VRX shares in his portfolio as of Q2, it is Mandel who stands to gain the most should the bid succeed - and lose in the case that it fails.

Since Valeant and Pershing Square made their first bid for Allergan on April 22, VRX has declined -2.58%. Its price climbed as high as $138.13 on May 1st and as fallen as low as $106.73 on August 7th. It closed the day yesterday, November 5th, at $131.91.

VRX Chart

Allergan. With 28.88 million shares in his portfolio, Ackman's got a lot in play with AGN. But so does John Paulson, who as of the second quarter holds 5.6 million shares. Lemann, Chilton and Farallon Capital have stakes in the company as well.

The bid battle has paid off well for Allergan shareholders across the board. The stock has climbed 38.25% since April and 76.73% year to date. Late last month, Allergan reported better-than-expected third-quarter earnings and lifted its forecast for the year.

AGN Chart

Actavis Throws its Hat into the Ring

In recent weeks, Allergan-Valeant-Ackman battle has become even more complex, and it's brought more hedge fund managers into play.

On Monday, Allergan said in a regulatory filing that it has been "approached by another party regarding a potential transaction." Media has identified the courter as Actavis (ACT) , which is fresh of its July acquisition deal with Forest Labs.

While neither party has openly confirmed discussions, an Allergan-Actavis merger would render the combined company too large for Valeant to acquire. Should the deal go through, Dan Loeb would be among the biggest beneficiaries, as the billionaire has a 2.5-million-share stake in Actavis as of the second quarter. Steve Mandel, Leon Cooperman, George Soros and John Paulson have positions in ACT as well.

The Curious Case of John Paulson

John Paulson's position in all of this is perhaps the most interesting to watch. As mentioned, the hedge fund magnate has stakes in Valeant, Allergan and Actavis. And while the billionaire investor has previously supported Valeant's takeover efforts, he has recently changed his tune.

Paulson & Co. is now urging Botox maker Allergan to consider a merger with specialty biopharmaceutical company Shire Plc (SHPG) . Stung by the breakdown of Shire's sale to AbbVie (ABBV) in October, the fund is moving to cut its losses on its 1.7% Shire stake.

The conclusion on this one: The war over Allergan is far from over.

At the time of publication, the author held no positions in any of the stocks mentioned.

Follow @EmilyStewartM

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.


TheStreet Ratings team rates ALLERGAN INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate ALLERGAN INC (AGN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, expanding profit margins and increase in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

You can view the full analysis from the report here: AGN Ratings Report

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