(Bloomberg) -- Elliott Management Corp. had built a position in Allergan Plc and was discussing with management the merits of splitting up the company before AbbVie Inc. agreed to acquire the Botox maker for $63 billion on Tuesday, according to people familiar with the matter.
Elliott supports the AbbVie takeover, said the people, who asked to not be identified because the matter isn’t public. It believes it is a win for Allergan shareholders and that even if the deal does not go through the company could fall back on its proposed plan to split up, they said.
The New York-based hedge fund owns a 2.5% stake in Allergan, according to a regulatory filing.
A representative for Elliott declined to comment. A representative for Allergan didn’t immediately respond to a request for comment.
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.
The hedge fund, run by billionaire Paul Singer, had been in constructive discussions with Allergan’s management in recent months, the people said.
The firm was advocating for 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 of the neurotoxin Dysport with Nestle SA’s Galderma unit, they said.
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.
To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net
To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Matthew Monks
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