Paulson & Co. ups position in Allergan
Key positions traded by Paulson & Co. in 4Q14 (Part 9 of 11)
Paulson raises position in Allergan
Paulson added a large position in Allergan (AGN) in the fourth quarter that ended in December. The position accounted for 6.99% of the funds’s portfolio. A filing revealed that the fund added 992,800 shares to its Allergan holding in the fourth quarter.
Allergan makes up 2.51% of the Health Care Select Sector SPDR Fund (XLV).
Overview of Allergan
Allergan develops and commercializes the following products for the ophthalmic, medical aesthetics, medical dermatology, and other specialty markets:
pharmaceuticals
biologics
medical devices
over-the-counter items
The global healthcare company also makes the anti-wrinkle treatment Botox. Allergan notes that Botox faces competition from Dysport, which is marketed by the UK-based subsidiary of European pharmaceutical group Ipsen (IPSEY). Other Botox challengers include Merz’s botulinum toxin product Xeomin, and Myobloc, a neuromodulator currently marketed by US WorldMeds. Companies such as Revance Therapeutics (RVNC) and Anterios are also developing products that will compete with Allergan’s Botox.
Allergan’s acquisition by Actavis
On November 17, the generic drug maker Actavis (ACT) agreed to buy Allergan for $66 billion, or $219 per share in cash and stock. The acquisition price is 10% above AGN’s closing price on November 14. The boards of both companies approved the transaction.
Actavis said, “The combination will create one of the top ten global pharmaceutical companies by sales revenue, with combined annual pro forma revenues of more than $23 billion anticipated in 2015. The transaction will help in long-term, double-digit organic revenue and earnings growth. It will generate at least $1.8 billion in annual synergies commencing in 2016.”
The companies expect the deal to close by 2Q15. On January 12, 2015, Actavis and Allergan announced that the US Federal Trade Commission had granted early termination of the waiting period with respect to the deal under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 .
The takeover bid from Actavis last year ended a seven-month, hostile pursuit of Allergan by Valeant Pharmaceuticals (VRX). Valeant had teamed up with activist investor William Ackman of Pershing Square Capital Management to offer about $53 billion for Allergan.
Fourth-quarter results beat estimates
For 4Q14, Allergan posted $1.88 billion in total product net sales, up 13.8%, or 17.2% on a constant currency basis, compared to the corresponding period last year. Total revenue was $1.91 billion. Total specialty pharmaceuticals net sales rose 12.4%, and core medical devices net sales increased 20.7%. Allergan posted a profit of $537.2 million, or $1.76 a share, up from $313 million, or $1.04 a share, in the corresponding quarter last year. Allergan says it saw double-digit sales growth in all businesses.
The next part of this series will look at the fund’s stake update in Mylan.
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