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Elliott Management adds new position in Allergan

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Elliott Management and Allergan

Elliott Management has started a new position in Allergan (AGN). The investment represents 2.2% of the overall hedge fund portfolio. The fund bought shares worth $211 million according to its latest 13F filings for 4Q14.

Allergan makes up 0.37% of the SPDR S&P 500 ETF Trust (SPY). The ETF tracks the overall performance of 500 publicly traded companies in the growth sector.

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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 to be acquired by Actavis

In November 2014, the generic drug maker Actavis (ACT) agreed to buy Allergan for $66 billion, or $219 per share in cash and stocks. The acquisition price is 10% above Allergan’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.

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Allergan reports operating results for 4Q14, beats estimates

In February 2015, Allergan announced its operating results for 4Q14. It reported $1.77 diluted earnings per share attributable to stockholders. In comparison, it reported $1.04 diluted earnings per share attributable to stockholders for 4Q13.

Allergan also reported product sales of $1,889 million, an increase of 13.8% compared to the same period in 4Q13. While the total specialty pharmaceuticals net sales increased 12.4% on a year-over-year basis, total core medical devices net sales increased 20.7%.

As stated by David E.I. Pyott, Allergan’s chairman of the board and chief executive officer, “Allergan yet again recorded in the fourth quarter the strongest increase in absolute dollar sales in any quarter in our history driven by exceptional performance across all of our businesses and geographic regions. This is a tribute to the focus of our employees during the unsolicited acquisition attempt.”

Allergan – 4Q14 comparison

Allergan’s main competitors, namely Novartis (NVS) and Johnson & Johnson (JNJ), declared their respective 4Q14 results. Earnings per share, or EPS, for NVS was $1.21, while for JNJ, it was $0.89. This is lower than Allergan’s EPS of $1.77.

Johnson & Johnson’s sales decreased by 0.6% on a year-over-year basis, and Novartis’s sales fell as well, by 1.96% over 4Q13.

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