One of the most interesting supporting actors in the Allergan takeover drama is Goldman Sachs, which is a financial adviser (along with BofA Merrill Lynch) to the Botox maker. Goldman is known for defending takeover targets, so it made sense when Allergan brought in the bank to help it fend off a joint hostile advance from the Canadian pharmaceutical company Valeant and the hedge fund Pershing Square.
But as David Gelles reported for the New York Times in June, Goldman has been unusually quiet in the Allergan battle, and for an unusual reason: In June 2013, Goldman was the sole underwriter on a $2.3 billion Valeant stock offering to raise money for its acquisition of Bausch & Lomb, a Goldman client. Goldman even invested $300 million of its own money in the Valeant offering, according to the Times story. Goldman, in other words, had a different view (at least in June 2013) of Valeant’s business model than Allergan’s board has been loudly proclaiming for the past six months.
And according to a new filing by Pershing and Valeant, Goldman may also have had a different view than Allergan’s directors on how Allergan should have responded to their offer.
Pershing and Valeant have asked U.S. District Judge David Carter of Riverside, California, for permission to amend their counterclaims in the Allergan suit accusing Pershing of insider trading. Monday’s filing adds some new accusations, based on depositions of Allergan directors and advisors and about 4,200 documents Allergan produced in discovery, to what Valeant and Pershing previously asserted in August. Perhaps the most provocative of them is that Allergan disregarded advice from its advisers, specifically, Goldman.
The proposed amended counterclaims are heavily redacted, but Pershing and Valeant claim that after they launched an offer for Allergan, Goldman Sachs recommended that Allergan “ask for information from Valeant.” Instead, according to the filing, Allergan hired Alvarez & Marsal and FTI as accounting experts and began its campaign to discredit Valeant, even undertaking a roadshow in Canada to trash Valeant with investors who owned Valeant shares but not Allergan stock. (The filing says, tantalizingly, that Allergan hired Alvarez and FTI because it was “unable to get Goldman to” do something, but whatever the something is is redacted.)