David Tepper now has the go-ahead to go full activist on Allergan if he wants to
- Noted activist investor David Tepper's hedge fund Appaloosa Management has received Federal Trade Commission antitrust clearance to increase its stake in Allergan.
- Investors have been unhappy with Allergan's stock performance over the last year, and some would like to see the pharma company explore splitting up.
- Allergan shares closed up 3% on Thursday.
Allergan investors have been pushing the company privately to consider making big changes. Now another big investor may be joining the pack.
Hedge fund Appaloosa Management, run by David Tepper, received antitrust clearance from the Federal Trade Commission on Thursday to potentially increase its stake in the Botox maker. This means that Appaloosa now has more flexibility if it wants to take an activist approach with the company.
Appaloosa now holds 3.7 million shares, making it the 15th largest shareholder in Allergan, according to a 13F filing from May 15.
A representative from Appaloosa declined to comment on its position in Allergan.
"Allergan welcomes all investments in our company. We maintain an active dialogue with our shareholders and value their constructive input and ideas on delivering long-term value," said an Allergan spokeswoman.
Over the past year, Allergan's stock has fallen 27%, while over the same period the Nasdaq Biotech Index has risen by 11%. In response to the stock's performance, some of Allergan's top shareholders have approached activist investors to get involved in pushing for change at the company, Business Insider previously reported.
Business Insider previously spoke with half a dozen funds with top 50 positions in Allergan who said they have held talks with company management over the last several months about selling off businesses that are not central to the drugmaker's strategy. These include women's health, which makes products such as the birth control pill Lo Loestrin Fe and menopause treatment Femring, in addition to the urology and gastroenterology units.
Allergan CEO Brent Saunders acknowledged in the company's first-quarter earnings call in April the disconnect between how the company has performed and its stock price. He said the company is "deep into the process" of reviewing its strategic options, including divesting certain businesses and splitting the company outright. Though he didn't give a set timeline, he said he'd give an update at the next earnings call in a few months if not before.