Activists take M&A whip hand

Peter Lee
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There’s an intense debate going on at many of the big banks over how they should engage with shareholder activists as potential drivers of M&A to release corporate value. More firmly established in the US, activists may yet have a growing role to play in Europe.

One closely watched big deal announced this year will be the $62.4 billion pursuit of Allergan Inc in the US by Valeant Pharmaceuticals of Canada. It combines all the elements. Valeant politely listed at number three on its reasons for acquiring the US company – after scale benefits with customers and cost synergies – the low-single digit corporate tax rate to which the combined company would be subject. It’s an inversion trade and, even more controversially, one being pursued in co-operation with Pershing Square, the specialist activist fund of William Ackman which had acquired a 5% stake in Allergan in the run up to announcement of Valeant’s first bid in late April. As Euromoney went to press, both sides were still in the hissy stage. Allergan, the maker of Botox, has alleged in court that Pershing Square built up its stake with fore-knowledge of Valeant’s bid. Valeant and...