JANA Partners ups position in Valeant Pharmaceuticals

JANA Partners reveals 4Q14 holdings: What's new and what's gone? (Part 11 of 11)

(Continued from Part 10)

JANA adds to Valeant Pharmaceuticals

JANA Partners increased its stake in Valeant Pharmaceuticals International, Inc. (VRX) during the fourth quarter. The position accounted for 5.76% of the fund’s 4Q14 portfolio with 4,307,534 shares.

Some of Valeant Pharmaceuticals’ generic competitors, including Abbott Laboratories (ABT) and Actavis (ACT), have exposure to the broader industry Health Care Select Sector SPDR Fund (XLV). Actavis and Abbot Laboratories make up 2.85% and 2.17% of XLV, respectively.

Overview of Valeant Pharmaceuticals

Valeant Pharmaceuticals International (VRX) is based in Quebec, Canada. It’s a multinational specialty pharmaceutical and medical device company. It develops, manufactures, and markets a broad range of branded, generic, and branded generic pharmaceuticals, over-the-counter products, and medical devices such as contact lenses, intraocular lenses, ophthalmic surgical equipment, and aesthetics devices.

The company has expanded its portfolio offerings and geographic footprint through numerous acquisitions, including Bausch & Lomb and PreCision Dermatology.

Since 2008, under CEO (chief executive officer) Mike Pearson, Valeant has made ~100 acquisitions and licensing-related deals. The transactions are valued at $19 billion. The company has also deployed cash through debt repayments and repurchases and share buybacks, enhancing shareholder value.

Valeant to acquire Salix

Valeant Pharmaceuticals (VRX) recently agreed to acquire Salix Pharmaceuticals for $158.00 per share in cash, or a total enterprise value of approximately $14.5 billion. A Valeant news release stated, “The combination is expected to yield greater than $500 million in annual cost savings from the cost base of the combined company. Synergies are expected to be achieved within six months of close, primarily from reductions in corporate overhead and R&D rationalization, with the cost to achieve these synergies to be approximately 65%.”

Valeant posts robust 4Q14 results

Valeant said its total revenue grew 10% year-over-year to $2.3 billion, despite a negative foreign exchange impact of $113 million. Full-year revenue grew 43% to $8.3 billion. J. Michael Pearson , Valeant’s chairman and chief executive officer, said the growth was driven by “outstanding growth in the U.S., most notably dermatology.”

Valenat’s profits surged to $534.9 million or $1.56 per share, from $123.8 million or $0.36 in the year-ago period.

Valeant expects revenue for 2015 to be in the range of $9.2 billion to $9.3 billion, about 14% to 15% growth from 2014.

JANA’s 4Q14 positions

JANA Partners added new stakes in NCR Corporation (NCR), SolarCity Corporation (SCTY), Computer Sciences Corporation (CSC), and Salix Pharmaceuticals, Ltd. (SLXP). It sold stakes in Equinix, Inc. (EQIX), Cameron International Corporation (CAM), Dollar General Corporation (DG), and QEP Resources Inc. (QEP). It added to its stakes in Hertz Global Holdings, Inc. (HTZ) and Valeant Pharmaceuticals (VRX).

Browse this series on Market Realist:

• Part 1 - A look at JANA Partners’ holdings in 4Q14

• Part 2 - JANA adds significant new position in NCR Corporation

• Part 3 - JANA adds new position in SolarCity