David Pyott: The Battle for Allergan (A)

This case series charts the evolution of the hostile battle for Allergan and its ultimate sale to a white knight, Actavis. David Pyott had been the CEO of Allergan since January 1998; only the third CEO in the company's 60-year-plus history. Allergan was primarily known for Botox, the aesthetic anti-wrinkle product, but the company, which had started out in eye care, had developed Botox into a US$2 billion multipurpose drug. By 2014 the company, which enjoyed double-digit growth, had over 11,000 employees, sold its products in 100 countries and had 40 direct-selling subsidiaries. The business mix included eye care, neurosciences, medical aesthetics, medical dermatology, breast aesthetics and urologics. R&D was the backbone of the company and it had strong cash reserves. In April 2014 it came as a shock to Pyott and the Allergan board to learn that that pharma company Valeant, in partnership with Pershing Square Capital Management, had announced its intention to make a hostile takeover of Allergan. The ensuing battle was hostile, attracting media interest, hostile and supportive stories in the papers, and 'games' to force Allergan into negotiating a sale. Tricks included hacking emails in an attempt to find out information on the fight team's strategy and moves. Pyott and the board had managed to drive up the share price over several months in their attempt to keep Allergan independent. In November 2014, a Californian judge accepted Valeant/Pershing Square's demand that shareholders should be allowed to vote on its bid. Case A follows the battle from the initial announcement to the court judgement. Case B then illustrates what happened next. Pyott and the 'fight' team realised that they were not able to keep Allergan independent and looked for a white knight to make a higher bid for the company. They successfully identified and negotiated with Actavis, a fellow pharma company. The sale was announced later in November. While Allergan no longer remained an independent

• Mergers and acquisitions
• Crisis management
• Leadership