If Allergan CEO David Pyott were to do it all over again, he says he would be just as aggressive.
Last year, Allergan became the target of a coordinated hostile takeover bid from activist investor Bill Ackman and rival pharmaceutical company Valeant. The M&A battle was one of the most contentious in recent memory. To fend off the attack, Allergan (AGN) said Valeant’s financial reports were opaque and potentially misleading. It called Valeant’s business model unsustainable. And, eventually, it sued Valeant (VRX) and Ackman, accusing both of them of fraud and insider trading.
“I was quoted as saying Valeant is vile,” says Pyott.
And he says he would do it all again.
In an interview with Fortune, Pyott says the decision to go on the attack was his own, but he admits that having good advisors around him helped solidify his counterattack. He says his stance immediately won him private praise from some long-term shareholders.
Pyott says he knew Valeant CEO Michael Pearson before the company’s became entangled and that, as early as 2013, Pearson was interested in acquiring Allergan. He ran the numbers and says that he concluded that Valeant couldn’t make a successful hostile bid on its own. He didn’t know, however, that Valeant had teamed up with Ackman until a Wall Street Journal reporter called him looking for a response shortly before the bid was announced.
Almost immediately, Pyott says defending his company against the Ackman-Valeant combo was his full time job for most of 2014, spending 90% of his time on the hostile attack. He handed over day-to-day operations at Allergan to his top deputy. In that period, Allergan’s board met 34 times, mostly on Sundays, to strategize.
In the end, the effort paid off. Allergan was eventually acquired by Activis (ACT) for $219 a share, far more than the original $152 a share offer that Valeant and Ackman had offered. And Pyott says he ended up with a buyer that values investment in research and development as much as he does. Valeant would likely have cut R&D at Allergan—which is most famous for developing Botox—by 95%.
Over the past few months, Pyott says he has received several calls from CEOs who have either come under attack by activist shareholders or are worried they might be. They call to pick his brain or offer him congratulations. He says he was even recently asked to address a corporate board on the subject.
When a reporter recently joked that he could probably make a lot of money as a consultant to companies undergoing activist attack, Pyott responded that he probably could, but no thanks. Instead, he’s looking at helping to start a hospital in Africa, which is as far away as he can get from Bill Ackman and other activists.
