giofranchi Posted March 13, 2015 Author Share Posted March 13, 2015 I have just added to my VRX investment. I am really exited to see what Pearson and Ackman could engineer together next. ;) Cheers, Gio Link to comment Share on other sites More sharing options...
Liberty Posted March 13, 2015 Share Posted March 13, 2015 http://ir.valeant.com/investor-relations/news-releases/news-release-details/2015/Valeant-Announces-Pricing-Of-Private-Offering-Of-Senior-Notes-3132015/default.aspx Raised 10.1 billion instead of 9.6. Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) ("Valeant" or the "Company") announced today that VRX Escrow Corp., a newly formed wholly owned Canadian subsidiary of the Company, has priced $2.0 billion aggregate principal amount of 5.375% senior unsecured notes due 2020 (the "2020 notes"), $3.25 billion aggregate principal amount of 5.875% senior unsecured notes due 2023 (the "2023 notes"), €1.5 billion aggregate principal amount of 4.50% senior unsecured notes due 2023 (the "Euro notes"), and $3.25 billion aggregate principal amount of 6.125% senior unsecured notes due 2025 (the "2025 notes" and together with the 2020 notes, the 2023 notes and the Euro notes, the "notes"). The notes offering is expected to close on or about March 27, 2015. The notes offering has been upsized to approximately $10.1 billion U.S. dollar equivalent aggregate principal amount of notes from the previously announced $9.6 billion U.S. dollar equivalent aggregate offering size. As a result of the increased size of the notes offering, the Company intends to incur $400 million less in incremental term loans in connection with the proposed acquisition of Salix Pharmaceuticals, Ltd. ("Salix"). The net proceeds of the offering, together with borrowings under the Company's incremental term loan facilities and cash on hand, are expected to be used to fund the previously announced acquisition of Salix, as well as repayments of indebtedness of Salix and certain transaction expenses. If the Salix acquisition is not consummated on or prior to August 20, 2015 or, prior to that date, the Company's merger agreement with Salix is terminated or the Company otherwise determines that the tender offer will not be pursued, the Company will be required to redeem the notes at 100% of the issue price of the notes, plus accrued and unpaid interest to, but excluding, the redemption date. Link to comment Share on other sites More sharing options...
Liberty Posted March 13, 2015 Share Posted March 13, 2015 http://www.nytimes.com/2015/03/14/business/dealbook/valeant-said-to-be-planning-to-raise-its-bid-for-salix-pharmaceuticals.html?ref=dealbook Valeant Pharmaceuticals is planning to team up with Pershing Square Capital Management and other top shareholders, including ValueAct Capital, to raise its bid for Salix Pharmaceuticals this weekend, according to people briefed on the matter. Link to comment Share on other sites More sharing options...
Liberty Posted March 16, 2015 Share Posted March 16, 2015 http://www.reuters.com/article/2015/03/14/us-salix-pharm-m-a-valeant-pharms-idUSKBN0M928420150314 Seems like it might be around 170. Link to comment Share on other sites More sharing options...
giofranchi Posted March 16, 2015 Author Share Posted March 16, 2015 Valeant And Salix Agree On Amended Terms To Merger Agreement http://ir.valeant.com/investor-relations/news-releases/news-release-details/2015/Valeant-And-Salix-Agree-On-Amended-Terms-To-Merger-Agreement/default.aspx Gio Link to comment Share on other sites More sharing options...
Liberty Posted March 16, 2015 Share Posted March 16, 2015 That should seal it. I wonder what was Pershing and Valueact's involvement, if any... Link to comment Share on other sites More sharing options...
giofranchi Posted March 16, 2015 Author Share Posted March 16, 2015 Endo Withdraws Proposal For Salix http://www.endo.com/news-events/press-releases Gio Link to comment Share on other sites More sharing options...
giofranchi Posted March 17, 2015 Author Share Posted March 17, 2015 Valeant Pharmaceuticals Announces Offering Of $1.45 Billion Of Common Shares http://ir.valeant.com:80/investor-relations/news-releases/news-release-details/2015/Valeant-Pharmaceuticals-Announces-Offering-Of-145-Billion-Of-Common-Shares/default.aspx Gio Link to comment Share on other sites More sharing options...
Liberty Posted March 17, 2015 Share Posted March 17, 2015 Valeant Pharmaceuticals Announces Offering Of $1.45 Billion Of Common Shares http://ir.valeant.com:80/investor-relations/news-releases/news-release-details/2015/Valeant-Pharmaceuticals-Announces-Offering-Of-145-Billion-Of-Common-Shares/default.aspx Gio Not my favorite thing, but better at 200 than closer to 100 a few months ago, and it's probably prudent to do. Link to comment Share on other sites More sharing options...
giofranchi Posted March 17, 2015 Author Share Posted March 17, 2015 Valeant Pharmaceuticals Prices Offering Of $1.45 Billion Of Common Shares http://ir.valeant.com/investor-relations/news-releases/news-release-details/2015/Valeant-Pharmaceuticals-Prices-Offering-Of-145-Billion-Of-Common-Shares/default.aspx $199 per share. Gio Link to comment Share on other sites More sharing options...
Liberty Posted March 21, 2015 Share Posted March 21, 2015 Pershing is buying 3 million extra shares from the new issue: Valeant announced late Monday it would sell $1.45 billion in new shares to fund the deal. Pershing Square Capital Management LP is buying 3 million shares in the offering worth about $600 million, according to a person familiar with the matter. That would boost Pershing Square’s stake in Valeant to above 5%. Link to comment Share on other sites More sharing options...
Liberty Posted March 24, 2015 Share Posted March 24, 2015 http://www.bizjournals.com/triangle/news/2015/03/24/salix-allergan-actavis-valeant-accounting-problems.html If it hadn’t been for accounting errors, it’s possible Salix Pharmaceuticals (Nasdaq: SLXP) would have been acquired last year for $205 per share, instead of the $173 per share for which it agreed to sell to Valeant. In a full history of the ups and downs Salix faced over the past 18 months, the company disclosed that Allergan Inc. (NYSE: AGN) offered as much as $205 per share in cash, something that would have valued the deal at more than $13 billion, or 18 percent higher than the $11.1 billion in cash that Valeant agreed to pay. Link to comment Share on other sites More sharing options...
loganc Posted March 25, 2015 Share Posted March 25, 2015 http://www.bizjournals.com/triangle/news/2015/03/24/salix-allergan-actavis-valeant-accounting-problems.html If it hadn’t been for accounting errors, it’s possible Salix Pharmaceuticals (Nasdaq: SLXP) would have been acquired last year for $205 per share, instead of the $173 per share for which it agreed to sell to Valeant. In a full history of the ups and downs Salix faced over the past 18 months, the company disclosed that Allergan Inc. (NYSE: AGN) offered as much as $205 per share in cash, something that would have valued the deal at more than $13 billion, or 18 percent higher than the $11.1 billion in cash that Valeant agreed to pay. Nice find, sir. Thanks for posting. I found the following quote interesting from the Glenview Letter (https://t.co/UgCY82kg0j): Concurrent with the writing of our letter, Endo submitted a topping bid for Salix Pharmaceuticals, which had previously agreed to be acquired by Valiant. In response, Valiant increased their bid by nearly 10% and Endo walked away on price. While we understood the attraction of Salix to multiple acquirers, we do not believe the property is so unique that it should be pursued at all cost. We applaud Endo’s price discipline and believe there will be ample growth opportunities ahead. I guess one would assume that Valiant [sic] wasn't disciplined on price? That is quite interesting based on his position in ACT and the bid made for AGN. Further, is it not true that the dollar amount that ENDP was offering in their cash+stock deal was at a higher pps than the final "Valiant" price? Certainly an interesting use of "price discipline." Link to comment Share on other sites More sharing options...
Liberty Posted March 25, 2015 Share Posted March 25, 2015 Concurrent with the writing of our letter, Endo submitted a topping bid for Salix Pharmaceuticals, which had previously agreed to be acquired by Valiant. In response, Valiant increased their bid by nearly 10% and Endo walked away on price. While we understood the attraction of Salix to multiple acquirers, we do not believe the property is so unique that it should be pursued at all cost. We applaud Endo’s price discipline and believe there will be ample growth opportunities ahead. I guess one would assume that Valiant [sic] wasn't disciplined on price? That is quite interesting based on his position in ACT and the bid made for AGN. Further, is it not true that the dollar amount that ENDP was offering in their cash+stock deal was at a higher pps than the final "Valiant" price? Certainly an interesting use of "price discipline." I think it's nonsense. Valeant (not "valiant") won mostly because they paid all cash and quickly, without conditions that created a lot of uncertainty (uncertainty being the last thing that Salix's interim management wants at this point), while Endo offered 75% stock and required a couple of shareholder votes over a couple of quarters. Valeant had to raise its bid a bit to be sure to win, because the cash and speed might not have been worth quite the difference between the bids, but it's not like their earlier bid was their maximum (how many times did they raise it for Allergan? clearly they don't start at the top of their range). If their track record is anything to go by, they'll over-deliver on synergies at Salix too, stoke the organic growth, and use the new GI platform to further deploy capital with lots of bolt-ons. Results should be quite satisfactory, even if they paid a bit more than they would have if Endo had never shown up. Link to comment Share on other sites More sharing options...
maxthetrade Posted March 25, 2015 Share Posted March 25, 2015 Apparently Munger hasn't the highest opinion on VRX: "Valeant is like ITT and Harold Geneen come back to life, only the guy is worse this time." Link to comment Share on other sites More sharing options...
loganc Posted March 25, 2015 Share Posted March 25, 2015 Apparently Munger hasn't the highest opinion on VRX: "Valeant is like ITT and Harold Geneen come back to life, only the guy is worse this time." I don't really get that comparison. It is obviously "beneficial to society" (I think that roughly what Munger said in the past) when 3G fires people, but it is terrible when Pearson does it. It is similar to Buffett's comments about private equity. PE is terrible, except for doing deals with 3G where we gear HNZ and BKW-THI to the moon. Link to comment Share on other sites More sharing options...
Guest wellmont Posted March 25, 2015 Share Posted March 25, 2015 mystifying comments that strike me as him not being very close to the situation, and never studying the company or paper trail. they both seem to have blind spots. they criticize others for the very practices they are undertaking. brk is the ultimate roll up showing the model works. so today we get criticism of a roll up that has done exceptionally well for shareholders. brk takes advantage of 3g private equity model when it suits them, that is when he can make a ton of money. and they can do the dirty work of cutting costs so he is not tainted. then he is critical of the private equity model in general (because they buy businesses that he wants to own). he criticizes high executive comp and options abuses just not at the company he has a longstanding massive investment in, and is very chummy with management. he says you don't need to borrow to get rich. then he goes out and levers up heinz and got very rich, at the same time firing hundreds if not thousands. Link to comment Share on other sites More sharing options...
Liberty Posted March 25, 2015 Share Posted March 25, 2015 As much as Munger is a hero of mine, I think he's wrong here (it's not like anyone is always correct). I suspect he's followed Valeant from afar in the media, and since most of the media coverage has been quite negative in the past year (the Allergan line repeated everywhere), it did sound to him like a story he's heard before. I wish his comment had been more detailed so we could know for sure if this is just a superficial opinion on things, a throwaway line during a meeting where he spoke for a long time, or if he actually knows enough about the situation to be informed and still came to that conclusion. From Wikipedia: In 1959, Harold Geneen became CEO. Using leveraged buyouts, he turned the minor acquisitions of the 1950s into major growth during the 1960s. In 1963, ITT attempted to purchase the ABC television network for $700 million. The deal was halted by federal antitrust regulators who feared ITT was growing too large. In order to continue growing while not running afoul of antitrust legislation, it moved to acquire companies outside of the telecommunications industry. Under Geneen, ITT bought over 300 companies in the 1960s, including some hostile takeovers. The deals included well-known businesses like the Sheraton Hotel chain, Wonder Bread maker Continental Baking, Rayonier, and Avis Rent-a-Car. ITT also absorbed smaller operations in auto parts, energy, books, semiconductors and cosmetics. In 1966, ITT acquired Educational Services, Inc., an operator of for-profit schools, which became ITT/ESI. When ITT attempted to acquire The Hartford insurance company in 1970, the US Justice Department filed suit, and ITT agreed to divest assets equal to those of Hartford's, including Avis.[13] ITT's sales grew from about $700 million in 1960 to about $8 billion in 1970, and its profit from $29 million to $550 million. However, when the higher interest rates started eating away at profits in the late 1960s, ITT's growth slowed considerably. ITT was buying a ton of random stuff at a time when conglomerates were popular. Food makers, car rental, defense contractors, TV stuff, cosmetics, books, whatever. Throw it all into the pot. Valeant is very different. You have a guy who spent his entire career studying pharma, who's very carefully selecting certain pharma assets that have desirable characteristics and buying companies that fit into that strategy and that have real synergies with the existing operation. In the past year he's proven that the restructuring charges do disappear if acquisitions stop. And he's been doing it at a time when his approach was very unpopular, with almost everybody being a skeptic and his stock being undervalued for many years. Not exactly the conglomerate indiscriminate buying boom bis. When Valeant starts buying auto part makers, movie studios and shrimp farms with stock, then we'll know something has gone wrong. In the meantime, Valeant is a lot more like a mix of P&G and 3G than it is like ITT. I'm pretty sure Munger likes both 3G and P&G... Not to mention that the ITT guy was apparently involved in coups in Brazil and Chile. And Pearson is supposedly worse? Did he eat a puppy at the annual meeting and nobody told me? Basically, Munger is wrong. Having a contrary opinion to one of my heroes feels weird, but I'm sure Munger would prefer independent thinking even if it disagrees with him than a deferral to authority. Link to comment Share on other sites More sharing options...
original mungerville Posted March 26, 2015 Share Posted March 26, 2015 I agree, I think he is wrong on Valeant. It is weird disagreeing with him. All the media has focussed on Valeant cutting to the bone and organic revenue growth being lower than expected which may be what Munger is picking up on (which, by the way, is not unlike the view of many with 3G at Heinz). The other area I disagreed with Buffett and Munger on is gold which I think is helpful to a portfolio in an era of ever increasing central bank stimulus. It feels weird. Ray Dalio was asked about Buffett's view that gold is not useful to own, and he replied that, sure, over a very long period (like decades / century) a good business is better, however, in the next few years he thinks gold is important and said he thought Buffett was wrong. A third area of disagreement was a few years back during the whole Fairfax / Overstock naked short-selling enterprise, Buffett was asked a question about naked short-selling and he dismissed it as something irrelevant, etc. Link to comment Share on other sites More sharing options...
giofranchi Posted March 26, 2015 Author Share Posted March 26, 2015 mystifying comments that strike me as him not being very close to the situation, and never studying the company or paper trail. they both seem to have blind spots. they criticize others for the very practices they are undertaking. brk is the ultimate roll up showing the model works. so today we get criticism of a roll up that has done exceptionally well for shareholders. brk takes advantage of 3g private equity model when it suits them, that is when he can make a ton of money. and they can do the dirty work of cutting costs so he is not tainted. then he is critical of the private equity model in general (because they buy businesses that he wants to own). he criticizes high executive comp and options abuses just not at the company he has a longstanding massive investment in, and is very chummy with management. he says you don't need to borrow to get rich. then he goes out and levers up heinz and got very rich, at the same time firing hundreds if not thousands. +1 I agree 100%! Gio Link to comment Share on other sites More sharing options...
giofranchi Posted March 26, 2015 Author Share Posted March 26, 2015 Having a contrary opinion to one of my heroes feels weird, but I'm sure Munger would prefer independent thinking even if it disagrees with him than a deferral to authority. I would say I have no hero… All I care about are rational things, instead of irrational things… All I look for are great results, instead of poor results… Whoever acts rationally and gets great results… Well, he/she is my "hero"… Until he/she starts acting irrationally and getting poor results! ;) Period. Cheers, Gio Link to comment Share on other sites More sharing options...
giofranchi Posted March 26, 2015 Author Share Posted March 26, 2015 Based on the number of shares owned, Pershing would be the second largest holder of VRX, behind Ruane Cunniff & Goldfarb (Sequoia Fund) and would hold just slightly more shares than Jeff Ubben's ValueAct Capital. Pershing's 13D filing also contained the following statement under 'purpose of transaction': "The Reporting Persons think highly of the Issuer’s management team, strategy, and track record. While the Reporting Persons hold their stake for investment purposes, representatives of the Reporting Persons may continue to conduct discussions from time to time with management of the Issuer, and may conduct discussions with other stockholders of the Issuer or other relevant parties, in each case, relating to matters that may include the strategic plans, strategy, assets, business, financial condition, operations, and capital structure of the Issuer. The Reporting Persons may engage the Issuer, other stockholders of the Issuer or other relevant parties in discussions that may include one or more of the other actions described in subsections (a) through (j) of Item 4 of Schedule 13D. In addition to the foregoing, the Reporting Persons expect to conduct discussions with the Issuer and other relevant parties regarding strategic acquisitions by or joint ventures with the Issuer, or other similar arrangements. These discussions would be exploratory in nature and there is no assurance that they would lead to a definitive transaction." http://www.marketfolly.com/2015/03/pershing-square-reveals-size-of-valeant.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+MarketFolly+%28Market+Folly%29 Gio Link to comment Share on other sites More sharing options...
Liberty Posted March 26, 2015 Share Posted March 26, 2015 Having a contrary opinion to one of my heroes feels weird, but I'm sure Munger would prefer independent thinking even if it disagrees with him than a deferral to authority. I would say I have no hero… All I care about are rational things, instead of irrational things… All I look for are great results, instead of poor results… Whoever acts rationally and gets great results… Well, he/she is my "hero"… Until he/she starts acting irrationally and getting poor results! ;) Period. Cheers, Gio That's how I define a hero; not someone who can't do wrong, but someone who does do a lot right. So I admire people like Albert Einstein and Richard Feynman and Benjamin Franklin and Buffett, etc, but that doesn't mean I automatically agree with everything that they do/did or say/said. I think you know that's what I meant when I said "hero" (and then basically contradicted Munger in that same post, so we're not talking blind worship). Link to comment Share on other sites More sharing options...
giofranchi Posted March 26, 2015 Author Share Posted March 26, 2015 I think you know that's what I meant when I said "hero" Yes! Of course! :) Gio Link to comment Share on other sites More sharing options...
Jurgis Posted March 26, 2015 Share Posted March 26, 2015 I completely agree with Munger about Valeant. However, since this thread is fanboyfest, I won't defend this opinion. 8) Liberty, if you seriously think that Munger said this because he read some media article, I think you are just underestimating him and showing your VRX owner bias. This does not mean that you guys won't make money. You might. For me though at this point in time Valeant is not investable. Have fun guys. Link to comment Share on other sites More sharing options...
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