Elliott Management Advocated for an Allergan Split Prior to Sale

(Bloomberg) -- Elliott Management Corp. had built a position in Allergan Plc and was pushing to split the company before AbbVie Inc. agreed to acquire it for $63 billion, according to people familiar with the matter.

The hedge fund, run by billionaire Paul Singer, supports the AbbVie takeover, said the people, who asked to not be identified because the matter isn’t public. Elliott believes the deal is a win for Allergan shareholders and that even if it doesn’t go through, the Botox maker could fall back on its proposed plan to split up, they said.

Elliott owns a 2.5% stake in Allergan, according to a regulatory filing. The New York based fund trimmed its position slightly on the news of the takeover, the filing shows.

Allergan shares rose 25% Tuesday after the deal was announced. They were up 1.3% to $164.55 at 12:23 p.m. Wednesday in New York in trading, giving the company of a value of almost $54 billion.

Representatives for Elliott and Allergan declined to comment.

Constructive Discussions

Elliott believes the company was deeply undervalued given the strong growth of its aesthetics business, which makes Botox, other fillers and breast implants, the people said. It had been in constructive discussions with Allergan’s management in recent months, they said.

The firm had advocated separating Allergan’s therapeutics business from its aesthetics business and setting up a licensing agreement between the two for Botox, which is used in both businesses, the people said.

The plan would have been similar to Ipsen SA’s licensing agreement for the neurotoxin Dysport with Nestle SA’s Galderma unit, they said.

Attractive Target

Elliott also believes the aesthetics division would be an attractive takeover target for consumer and pharmaceutical companies, they said.

The hedge fund had believed the split was the best path for the company prior to the agreement with AbbVie because it would have unlocked a lot of value, was within management’s control, and would have helped reestablish the leadership team’s credibility with investors, they said.

--With assistance from Cynthia Koons.

To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, Matthew Monks, Michael Hytha

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