July 16, 2014 / 8:30 PM / 5 years ago

Hedge fund manager Paulson calls Valeant a 'serious acquirer'

NEW YORK (Reuters) - Billionaire investor John Paulson on Wednesday called Valeant Pharmaceuticals International Inc a “very serious acquirer” and predicted that Allergan Inc cannot rebuff the drug maker on its own.

President and Portfolio Manager of Paulson & Co. John Paulson speaks during the Sohn Investment Conference in New York, May 16, 2012. REUTERS/Eduardo Munoz

Paulson, whose hedge fund Paulson & Co holds a roughly $1 billion stake, or 6 million shares, in Allergan, threw his weight behind Valeant’s bid to buy the Botox maker on Wednesday at the CNBC Institutional Investor Delivering Alpha Conference.

Allergan traded at $165.50 on Wednesday, having climbed 49 percent this year alone with most of the gains coming after Valeant’s bid was announced. Paulson said Allergan’s share price could rise to $222 a share based on the kind of savings Valeant’s chief executive officer might make.

Paulson called Mike Pearson, Valeant’s CEO, a very cost-conscious executive who has added significant value for shareholders in the last years.

“He is a proven success,” Paulson said. Valeant, working with activist investor William Ackman, has offered to pay $53 billion for the Botox maker but Allergan has steadfastly rejected any discussions with Valeant.

The offer, which includes $72 in cash plus 0.83 Valeant shares, is worth about $177 per share.

Ackman is mounting a proxy battle to try and force Allergan’s board to discuss the Valeant bid and on Wednesday accused Allergan of violating its fiduciary duty for not negotiating with Valeant.

Paulson said he would listen to a call on Thursday, hosted by Ackman, which will focus on Allergan’s corporate governance and other aspects of its business. The call is scheduled for 8:30 a.m. EDT (1230 GMT) and will allow listeners to ask questions.

Paulson said that Allergan could defend against Valeant’s bid but would need to make an acquisition of its own to do so. “Standing still does not seem to be a plan of action,” he said.

Paulson, whose trades have been widely followed ever since he earned billions by betting against the overheated housing market in 2007, often bets on companies that may become acquisition targets.

Reporting by Svea Herbst-Bayliss; Editing by Lisa Shumaker

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