Hedge fund manager can count on a significant profit on his Allergan stake despite losing out to rival Actavis in long-running takeover tussle.
Billionaire activist investor Bill Ackman has made around $2.7bn of profit on his punt on US botox maker Allergan, despite failing to seize control of the company.
Allergan on Monday agreed to a $66bn takeover by US rival Actavis to escape a hostile takeover campaign by Mr Ackman’s Pershing Square Capital and joint bidder Canada’s Valeant Pharmaceuticals.
Allergan said Actavis has offered $219 a share, in comparison to the joint bidder’s $180 a share bid and reports it could be sweetened up to $210 a share.
However, despite losing out on the deal, Mr Ackman is in line for a significant windfall as his 9.7pc stake in Allergan is now worth over $6bn.
Shares in the botox maker have surged by 57pc since April, when Mr Ackman first disclosed his stake, kicking of a takeover tussle that has lasted most of the year.
Actavis’ victory will have a significant impact on other global pharmaceutical companies, including London-listed Shire, as the long-running battle for Allergan drew in a number of its peers.
It was widely speculated that Valeant was pushed into going hostile by reports that Allergan could make an offer for Shire, prior to its ultimately failed £36bn takeover by AbbVie.
US hedgefund Paulson & Co, which was left nursing significant losses after the tax inversion deal between AbbVie and Shire collapsed, last month urged Allergan to pursue a deal with Shire as an alternative to Valeant.
The Telegraph has previously reported that Susan Kilsby, Shire’s chairman, had private conversations with Allergan about a merger of equals during the summer, but believed a deal would have too much execution risk.
Both Actavis and Allergan have also been tipped as potential targets for Pfizer. The US drugmaker is now considering other options and has moved on from its ambitions to buy British drugmaker AstraZeneca, according to sources.
Valeant could now consider an acquisition of animal healthcare business Zoetis, a spin-off of Pfizer, according to analysts. Last week Mr Ackman disclosed a 8.5pc take in Zoetis, meaning the two could have a second attempt at joining forces.
Activist hedge funds posted a 0.93pc return last month, in comparison to event driven hedge fund returns which fell 1.40pc, on top of a 2.04pc fall in September, according to Prequin.