Retina Today - Inside a Hostile Takeover Battle (October 2014)

摘要

Allergan and Valeant Pharmaceuticals International are two major companies that are similar in size but have very different backgrounds, business models, and philosophies. Both are successful in their own way. By all accounts, Valeant’s hostile takeover attempt of Allergan this summer is one of the most high profile and controversial ever. The animosity between the two companies— and the number of accompanying lawsuits— continues to grow. Like a closely contested political race, executives on both sides have an agenda, as they elevate their pleas to shareholders from explanations of why a merger is a good or bad business move to personal attacks and accusations of broken federal securities laws. This takeover bid is challenging traditional corporate practices. If successful, it may ultimately serve as a blueprint for how mergers and acquisition deals get done in the future. FOCUSED ON THE BOTTOM LINE To readers who have been following Valeant over the past decade, the tactics and effort the company employed this summer to complete the takeover should come as no surprise. Besides being shrewd, creative, and forward thinking, perhaps the most important prerequisite for being a member of Valeant’s management team is having a tough skin. In their quest to grow the company and keep shareholders happy, the Valeant management team, led by former drug industry consultant Michael Pearson, may have taken more criticism in the past 5 years than most executives do during a career. That is because, with every acquisition, comes attrition and, with every boost in revenue, comes a cut in research. With a laser-sharp focus on growing the bottom line, Valeant has stuck to its philosophy: grow through serial deal-making, cut costs aggressively, and stop spending exorbitant amounts of money on risky research. The secret to the company’s success is no secret at all. Mr. Pearson and members of Valeant’s management team do not shy away from the company’s acquire-andcut philosophy. In fact, it is the promise they make to shareholders when making an acquisition. It is “a business model that gets rid of the valuedestroying part of pharmaceutical companies and keeps all the pieces that are value sustaining,” Mr. Pearson said in an interview with The Wall Street Journal.1 In an investor conference meeting in May 2014, on the same day that the company raised its bid to acquire Allergan, Mr. Pearson and his colleagues spent 3 hours touting the success of Valeant’s several business units—a direct attempt to win the votes of Allergan’s shareholders. “I hope days like today help reassure Allergan’s shareholders that the quality of the currency they’re getting is a very high-quality currency, that our business will continue to grow organically, volume-led, and that we have a unique operating model that is an operating model for the future, not for the past,” Mr. Pearson said during the May conference. Some see such a cutthroat, acquire-and-cut strategy as harsh and myopic, but the results speak for themselves, at least from a financial perspective. From 2008, the year Mr. Pearson took over as CEO, to 2013, shares of Valeant have been in rocket mode as the company acquired one company after another, slashed duplicating costs, and boosted revenue. At the end of 2008, shares of Valeant were $9.65 per share. By the end of 2013, they were $117.40—more than 1,000% higher. Annual sales during that period rose sixfold to $5.8 billion. That growth continued into 2014, and by late February of this year, the stock was trading for $148 per share. The uncertainty surrounding the current acquisition attempt, however, is affecting the value of the company. Excluding a boost in share price after the initial announcement to buy Allergan in April, Valeant’s shares have been in a slow but steady decline. Whereas Allergan’s shares