fareastwarriors Posted November 28, 2014 Share Posted November 28, 2014 Failed Allergan Deal Strains Valeant’s Business Model http://dealbook.nytimes.com/2014/11/26/failed-allergan-deal-strains-valeants-business-model/?module=BlogPost-Title&version=Blog%20Main&contentCollection=The%20Trade&action=Click&pgtype=Blogs®ion=Body Link to comment Share on other sites More sharing options...
Liberty Posted November 29, 2014 Share Posted November 29, 2014 http://ir.valeant.com/investor-relations/news-releases/news-release-details/2014/Valeant-Announces-Redemption-of-US4450-Million-Aggregate-Principal-Amount-of-its-Outstanding-6875-Senior-Notes-due-2018/default.aspx Link to comment Share on other sites More sharing options...
Liberty Posted December 5, 2014 Share Posted December 5, 2014 http://www.nasdaq.com/article/activist-fund-valueact-capital-to-seek-up-to-15-billion-from-investors--update-20141205-00423 ValueAct raising $1.5bn. Link to comment Share on other sites More sharing options...
PJM Posted December 9, 2014 Share Posted December 9, 2014 Valeant to drop deal-making in near-term to cut debt http://www.reuters.com/article/2014/12/09/us-valeant-strategy-idUSKBN0JN0DG20141209 Link to comment Share on other sites More sharing options...
loganc Posted December 9, 2014 Share Posted December 9, 2014 Valeant to drop deal-making in near-term to cut debt http://www.reuters.com/article/2014/12/09/us-valeant-strategy-idUSKBN0JN0DG20141209 What a ridiculous article. Did Saunders over pay? What is the value of the ACT currency after doing an ass-ton of deals? Obviously, they don't question that. My conclusion is that ACT made a bid that even VRX couldn't justify. If VRX couldn't justify the valuation, then I don't see how ACT can make it work. It will be interesting to see how this works out. Best of luck. Link to comment Share on other sites More sharing options...
peter1234 Posted December 9, 2014 Share Posted December 9, 2014 Valeant to drop deal-making in near-term to cut debt http://www.reuters.com/article/2014/12/09/us-valeant-strategy-idUSKBN0JN0DG20141209 Here is their 'new' strategy: The new strategy, targeted for the next 2 to 3 quarters, may surprise some investors accustomed to Valeant's usual way of doing business. Over the next 2 to 3 quarters, Valeant also aims to sell more of its new products, which includes toenail fungus drug Jublia, athlete's foot product Luzu, acne treatment Onexton and a new line of Bausch and Lomb Ultra contact lenses. Link to comment Share on other sites More sharing options...
loganc Posted December 9, 2014 Share Posted December 9, 2014 Valeant to drop deal-making in near-term to cut debt http://www.reuters.com/article/2014/12/09/us-valeant-strategy-idUSKBN0JN0DG20141209 Here is their 'new' strategy: The new strategy, targeted for the next 2 to 3 quarters, may surprise some investors accustomed to Valeant's usual way of doing business. Over the next 2 to 3 quarters, Valeant also aims to sell more of its new products, which includes toenail fungus drug Jublia, athlete's foot product Luzu, acne treatment Onexton and a new line of Bausch and Lomb Ultra contact lenses. You are a moron. How do you know this is the "new" strategy? The strategy hasn't changed. Link to comment Share on other sites More sharing options...
peter1234 Posted December 9, 2014 Share Posted December 9, 2014 You are a moron. How do you know this is the "new" strategy? The strategy hasn't changed. According to the author of this article, their new strategy is selling product instead of buying companies. ;D Link to comment Share on other sites More sharing options...
loganc Posted December 9, 2014 Share Posted December 9, 2014 You are a moron. How do you know this is the "new" strategy? The strategy hasn't changed. According to the author of this article, their new strategy is selling product instead of buying companies. ;D Sorry...I mistook your comment as being from one of the VRX bears. I made a bad knee jerk reaction. I apologize for that. So, yes...the article says they are going to sell products..that is great.. My thinking is that the overall strategy has not changed. They are going to allocate capital in most logical spot. If that means holding back on current acquisitions, so be it. It seems to me that maximizing the ability to sell product would always be the plan, so that would not represent any change in strategy.. Link to comment Share on other sites More sharing options...
peter1234 Posted December 9, 2014 Share Posted December 9, 2014 You are a moron. How do you know this is the "new" strategy? The strategy hasn't changed. According to the author of this article, their new strategy is selling product instead of buying companies. ;D Sorry...I mistook your comment as being from one of the VRX bears. I made a bad knee jerk reaction. I apologize for that. So, yes...the article says they are going to sell products..that is great.. My thinking is that the overall strategy has not changed. They are going to allocate capital in most logical spot. If that means holding back on current acquisitions, so be it. It seems to me that maximizing the ability to sell product would always be the plan, so that would not represent any change in strategy.. No problem. Agree that the article is not very insightful. Also agree that the overall strategy has not changed (How could you have a new strategy for the next 2-3 quarters? And then change it again? Anything a company changes multiple times a year is certainly not strategy.) ;) Link to comment Share on other sites More sharing options...
loganc Posted December 9, 2014 Share Posted December 9, 2014 No problem. Agree that the article is not very insightful. Also agree that the overall strategy has not changed (How could you have a new strategy for the next 2-3 quarters? And then change it again? Anything a company changes multiple times a year is certainly not strategy.) ;) Again, sorry to have been a big douche there. Link to comment Share on other sites More sharing options...
Cageyone Posted December 9, 2014 Share Posted December 9, 2014 I sold 20 percent of my VRX holding last week at $167 CDN, which more than covered the cost of my original Biovail stock. So I guess now I'll wait to see how their "new strategy" works out over the next few quarters! Link to comment Share on other sites More sharing options...
CorpRaider Posted December 9, 2014 Share Posted December 9, 2014 Just sounds like a rational capital allocator saying the market for acquisitions isnt oresenting best use of capital at this time. Link to comment Share on other sites More sharing options...
Liberty Posted December 9, 2014 Share Posted December 9, 2014 Just sounds like a rational capital allocator saying the market for acquisitions isnt oresenting best use of capital at this time. Exactly, and preempting future attacks on the model by definitely proving they are not using m&a to mask problems while strengthening the balance sheet is a good idea. They'll still do some bolt-ons I bet. Link to comment Share on other sites More sharing options...
Guest wellmont Posted December 9, 2014 Share Posted December 9, 2014 this is what I said they would do back in nov. they lost $AGN because they didn't have transparency, and didn't have the balance sheet. I said he would pay down debt, take a "breather" from buying other companies, and probably wouldn't buy back much stock. this will give him a currency to do his next deal. at a certain stage you need to present yourself differently and MP realizes that. Link to comment Share on other sites More sharing options...
Liberty Posted December 9, 2014 Share Posted December 9, 2014 http://www.streetinsider.com/Analyst+Comments/Reuters+Valeant+%28VRX%29+Story+on+Deal-Making+Taken+Out+of+Context%3B+M%26A+Continues+to+Be+Important+-+Guggenheim/10081254.html Guggenheim analyst Louise Chen weighed in on Valeant Pharmaceuticals (NYSE: VRX) amid reports from the company will drop deal making. After talking with the company, Chen said the headlines were taken out of context and would view any weakness related to these headlines as a buying opportunity for VRX shares. "After speaking with VRX this morning, we are confident that M&A will continue to be an important growth driver for the company," Chen said. "This is the same message that VRX gave when we held a group meeting with investors and the executive management team on 11/21/14. At the meeting VRX said that post the failed bid for AGN (NEUTRAL, $212.56) the company's strategy remains the same. VRX is interested in small and large deals. VRX would look at verticals where it is already established but does not rule out expanding into new verticals. Geographic expansion (especially Asia) is also attractive." Link to comment Share on other sites More sharing options...
Liberty Posted December 12, 2014 Share Posted December 12, 2014 Another 35m buy by Ubben and ValueAct: http://www.sec.gov/Archives/edgar/data/885590/000141881214000084/xslF345X03/primary_doc.xml Link to comment Share on other sites More sharing options...
Mungerville Posted December 13, 2014 Share Posted December 13, 2014 Its pretty simple, they can't take on too much more debt relative to equity. So cash acquisitions are tough in this context and they are limited to spending 1-2 years of earnings on an acquisitions going forward - at least in terms of using cash. So whether they take a breather for another couple quarters or not does not change the strategy one iota. All it does is it permits them to not fuck around with small acquisitions, save some cash, and buy something a bit bigger. Also, at the same time, earnings become more transparent, so their currency in the form of their own common stock goes up hopefully providing them with another alternative for financing a portion of the bigger deal. So they could do a deal that is 4 times adjusted earnings (2x with cash and 2x with stock in terms of the mix). There is no change in strategy. The change is just "lets not fuck around with small acquisitions (eg, $2 billion) despite the constraint that we have lots of debt at this point and so its not as easy sailing as the last few years" and do something of consequence (eg, $8-10 billion) because both small and large take a minimum base level of management time and focus. Only short-term Wall Street analysts call this a change in strategy - its more like, lets have x-mas and New Years, report Q1 and Q2 clean (for a change) and maybe Q3 and Q4, AND then we will go do a material acquisition! If you want to call that a change in strategy, kiss my ass. Its a tactical change that is necessary currently give the debt on the balance sheet - that's it. BTW - This is Original Mungerville ( I found my old moniker "Mungerville" on a computer I rarely use in the house!) Link to comment Share on other sites More sharing options...
peter1234 Posted December 13, 2014 Share Posted December 13, 2014 Only short-term Wall Street analysts call this a change in strategy - its more like, lets have x-mas and New Years, report Q1 and Q2 clean (for a change) and maybe Q3 and Q4, AND then we will go do a material acquisition! If you want to call that a change in strategy, kiss my ass. Its a tactical change that is necessary currently give the debt on the balance sheet - that's it. BTW - This is Original Mungerville ( I found my old moniker "Mungerville" on a computer I rarely use in the house!) +1 Thanks for saying it so eloquently. Tried making this point before. :) Link to comment Share on other sites More sharing options...
original mungerville Posted December 15, 2014 Share Posted December 15, 2014 Only short-term Wall Street analysts call this a change in strategy - its more like, lets have x-mas and New Years, report Q1 and Q2 clean (for a change) and maybe Q3 and Q4, AND then we will go do a material acquisition! If you want to call that a change in strategy, kiss my ass. Its a tactical change that is necessary currently give the debt on the balance sheet - that's it. BTW - This is Original Mungerville ( I found my old moniker "Mungerville" on a computer I rarely use in the house!) +1 Thanks for saying it so eloquently. Tried making this point before. :) Thanks. I agree, yourself and I believe most on this thread understand this - I just wanted to lay it out a bit more to save us from wasting time with this drama of an apparent change in strategy. The idea now is to put that on the back-burner in our minds, hope the stock market continues its decline and that becomes fierce, Valeant doesn't do anything for a couple quarters, the stock drops a lot, and we get to finalize our long positions at extremely attractive prices. A boy can dream can't he? Link to comment Share on other sites More sharing options...
giofranchi Posted December 15, 2014 Author Share Posted December 15, 2014 A boy can dream can't he? Imo there is little doubt a “tactical” change, like the one you have described, might renew the interest of investors who got worried about the actual track record and performance of those businesses VRX has acquired, and therefore got also worried about the high level of debt: 3 or 4 quarters of results without any new acquisition should make clear enough how VRX’s existing businesses are actually performing, and at the same time should also help the company bringing down its debt load. If the market punishes its stock price for such a “tactical” change… well... then I agree with you: a boy can surely dream! ;) Gio Link to comment Share on other sites More sharing options...
CorpRaider Posted December 15, 2014 Share Posted December 15, 2014 I think maybe they saw that cubist deal and said..."It is getting a little crazy in here. Hmm maybe we should sit the next dance out." :D Link to comment Share on other sites More sharing options...
Liberty Posted January 8, 2015 Share Posted January 8, 2015 Valeant 2015 guidance call going on now. I'll post the audio when it's over. Nice touch: Mike Pearson has extended his contract for 5 years, and will now have ZERO base salary. Compensation entirely based on performance now. CFO extended 3 years. Here are the slides: http://ir.valeant.com/files/doc_presentations/2015/Guidance-presentation-Jan-2015-Final2_v001_s494y5.pdf Pearson just said in answer to question about M&A: 'Right now zero appetite to use our stock for M&A, believe we are significantly undervalued' Link to comment Share on other sites More sharing options...
original mungerville Posted January 8, 2015 Share Posted January 8, 2015 For some reason, I was expecting guidance to be revised upwards - I think the market anticipated it as well to some degree as the stock has been strong in the new year. In any case, that's all short term. I have been thinking about how to value Valeant, and have concluded that if the stock moves around +/- 30% it doesn't make a huge difference. The key with Valeant is the strength of the business model - if you believe in that, that is a huge margin of safety. Just let that work for 7 or so years and the stock should quadruple or so. Link to comment Share on other sites More sharing options...
original mungerville Posted January 8, 2015 Share Posted January 8, 2015 Just reading the slide deck, I love this management team. They are basically focusing on re-deploying their earnings mainly into small/medium acquisitions. Without issuance of more debt for a large acquisition, this will bring down their EBIT/E ratio over the next 18 months. This will eventually lead to a large acquisition. And in the meantime, earnings grow 10% organically, and the earnings redeployed into small/medium acquisitions have an IRR of 20%. So 30% growth while the business model gets "confirmed" by the market and EBIT/E gets reduced. Then of course they go in for the kill on a large acquisition. Life could be worse. Link to comment Share on other sites More sharing options...
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