Glossary of Hostile Takeover Terms with Discussion
- Thread starter Shoham
- Start date
Thanks Dan & 551. Enjoy the read!After all the money those investment banks made over the years advising Valeant to overpay for second grade assets, I think it would only be fair if they did the liquidation project gratis...(not a chance). Dan.
http://www.forbes.com/sites/nathanv...icals-prescription-for-disaster/#9d258406c654
From Bloomberg, Pearson was released this evening after a 9+ hour deposition given to Congress today, ending at 7 PM.
I am just thinking about Valeant CEO Pearson and his testimony yesterday. He is being represented by Bruce Yannett, of Debevoise & Plimpton. Yannett is rated as one of the US top white collar criminal lawyers specializing in FCPA (Foreign Corrupt Practices Act) issues. The FCPA requires, in part, companies whose securities are listed in the United States to meet its accounting provisions. "The FCPA requires corporations covered by the provisions to (a) make and keep books and records that accurately and fairly reflect the transactions of the corporation and (b) devise and maintain an adequate system of internal accounting controls." (That pretty much describes Valeant's accounting practices, right? ; )
The financial crisis of 2008 tested the resolution of the FCPA and much was found wanting. There were difficulties in making cases against individuals who were shielded by their Wall Street employers. In the end, it was easier for the Justice Department to issue civil penalties to the corporations, who paid multi-million, multi-BILLION settlements as the "cost of doing business," and which are even, in many cases, tax-deductible business expenses for the corporations, so the tax-payers get hit a second time.
However, fairly recently, new rules are being added and new resources directed to enforcing much-needed "Individual Accountability for Corporate Wrongdoing," a memo issued by deputy attorney general Sally Quillian Yates on 9 Sept 2015, a month before the Philidor revelation by SIRF. (The memo can be found on the justice.gov website) Yates gave a speech the next day where she further described the changes being made to how the department would be handling corporate misconduct going forward ("Deputy Attorney General Sally Quillian Yates Delivers Remarks at New York University School of Law Announcing New Policy on Individual Liability in Matters of Corporate Wrongdoing", 10 Sept 2015). The policy details six specific changes being made: effective immediately there are changes to how a company will be given credit for their full cooperation, "All or nothing, no more picking and choosing what gets disclosed" and they "must give up the individuals no matter where they sit within the company"; because of past difficulty in building cases against individuals once it gets bogged down in corporate investigations, going forward attorneys are to focus on individuals at the start of the investigation, whether it is a criminal or civil case; formalization of lines of communication so that all DOJ attorneys inform both sides of civil and criminal investigations; resolution of individual cases becomes primary to the corporate case, before the statute of limitations can expire; individuals will not be released from civil or criminal liability when resolving a matter with a corporation; broadening scope of civil enforcement of white collar crime, such that "wrongdoers (will be held) accountable for their actions and deter future wrongdoing...if that individual is liable, we can take what they have and ensure that they don't benefit from their wrongdoing. These individual civil judgments will also become part of corporate wrongdoer's resumes that will follow them throughout their careers...by holding individuals accountable, we can change corporate culture to appropriately recognize the full costs of wrongdoing, rather than treating the liability as a cost of doing business, a change that will protect public resources over the long term."
Within the Yates speech, on her first point about corporations giving up individual actors within the company, she also said the purpose of the policy was to better identify responsible individuals, with internal investigations tailored to the scope of the wrongdoing. "So for all you defense lawyers in the room-- and I know there are plenty of you-- keep this in mind. If you are representing a corporation and there's a question about the scope what's required, you can do what many defense attorneys do now-- pick up the phone and discuss it with the prosecutor." When the Senate demanded Pearson give a deposition under oath last Friday, and he was a no-show, part of the language used by his lawyer Bruce Yannett was to define "the scope" of the questions to be asked.
While all this negotiation was going on, and the Valeant Board was "urging" Michael Pearson to cooperate with the Senate inquiry, the DOJ issued another memo the same week, on 5 April 2016 "Criminal Division Launches New FCPA Pilot Program", written by assistant attorney general Leslie R. Caldwell of the Justice Department's Criminal Division. In it she gave concrete details on how new resources would be deployed to investigate and prosecute FCPA cases. This included an additional 10 prosecutors for the Criminal Division's Fraud Section FCPA unit (a 50% increase in prosecutorial teams). Also the FBI established three new squads of special agents devoted to FCPA investigations and prosecutions. And that the DOJ was also strengthening coordination with foreign counterparts. (Like Canada?!)
Anyway, the noose may be tightening. What do you think about a possible convergence of FCPA actions and the Valeant/Philidor situation? Is this a situation where FCPA rules could be used to bring penalties to individual actors within those companies?
The financial crisis of 2008 tested the resolution of the FCPA and much was found wanting. There were difficulties in making cases against individuals who were shielded by their Wall Street employers. In the end, it was easier for the Justice Department to issue civil penalties to the corporations, who paid multi-million, multi-BILLION settlements as the "cost of doing business," and which are even, in many cases, tax-deductible business expenses for the corporations, so the tax-payers get hit a second time.
However, fairly recently, new rules are being added and new resources directed to enforcing much-needed "Individual Accountability for Corporate Wrongdoing," a memo issued by deputy attorney general Sally Quillian Yates on 9 Sept 2015, a month before the Philidor revelation by SIRF. (The memo can be found on the justice.gov website) Yates gave a speech the next day where she further described the changes being made to how the department would be handling corporate misconduct going forward ("Deputy Attorney General Sally Quillian Yates Delivers Remarks at New York University School of Law Announcing New Policy on Individual Liability in Matters of Corporate Wrongdoing", 10 Sept 2015). The policy details six specific changes being made: effective immediately there are changes to how a company will be given credit for their full cooperation, "All or nothing, no more picking and choosing what gets disclosed" and they "must give up the individuals no matter where they sit within the company"; because of past difficulty in building cases against individuals once it gets bogged down in corporate investigations, going forward attorneys are to focus on individuals at the start of the investigation, whether it is a criminal or civil case; formalization of lines of communication so that all DOJ attorneys inform both sides of civil and criminal investigations; resolution of individual cases becomes primary to the corporate case, before the statute of limitations can expire; individuals will not be released from civil or criminal liability when resolving a matter with a corporation; broadening scope of civil enforcement of white collar crime, such that "wrongdoers (will be held) accountable for their actions and deter future wrongdoing...if that individual is liable, we can take what they have and ensure that they don't benefit from their wrongdoing. These individual civil judgments will also become part of corporate wrongdoer's resumes that will follow them throughout their careers...by holding individuals accountable, we can change corporate culture to appropriately recognize the full costs of wrongdoing, rather than treating the liability as a cost of doing business, a change that will protect public resources over the long term."
Within the Yates speech, on her first point about corporations giving up individual actors within the company, she also said the purpose of the policy was to better identify responsible individuals, with internal investigations tailored to the scope of the wrongdoing. "So for all you defense lawyers in the room-- and I know there are plenty of you-- keep this in mind. If you are representing a corporation and there's a question about the scope what's required, you can do what many defense attorneys do now-- pick up the phone and discuss it with the prosecutor." When the Senate demanded Pearson give a deposition under oath last Friday, and he was a no-show, part of the language used by his lawyer Bruce Yannett was to define "the scope" of the questions to be asked.
While all this negotiation was going on, and the Valeant Board was "urging" Michael Pearson to cooperate with the Senate inquiry, the DOJ issued another memo the same week, on 5 April 2016 "Criminal Division Launches New FCPA Pilot Program", written by assistant attorney general Leslie R. Caldwell of the Justice Department's Criminal Division. In it she gave concrete details on how new resources would be deployed to investigate and prosecute FCPA cases. This included an additional 10 prosecutors for the Criminal Division's Fraud Section FCPA unit (a 50% increase in prosecutorial teams). Also the FBI established three new squads of special agents devoted to FCPA investigations and prosecutions. And that the DOJ was also strengthening coordination with foreign counterparts. (Like Canada?!)
Anyway, the noose may be tightening. What do you think about a possible convergence of FCPA actions and the Valeant/Philidor situation? Is this a situation where FCPA rules could be used to bring penalties to individual actors within those companies?
- Shoham Apr 22, 2016 at 10:39: AM
Shoham
Member
The representation by a criminal attorney is significant and (at least here) quite expected. As for FCPA, I generally think of it as relevant when American companies pay bribes overseas (which, prior to 1977 FCPA, was not a violation of US law -- but certainly was a violation of local laws). When US security laws are violated by foreign companies, there is no shortage of statues under which they may be prosecuted.
I find it a bit amusing that whenever there is a big scandal (like the Lockheed bribery scandal for FCPA, Enron for Sarbanes-Oxley), a new law is created to outlaw what was already illegal beforehand (as evidenced by the prosecution of those involved). The Common Law concept of Fraud (which can be simply defined as "gain through purposeful deception") is good enough to put MP, and many other, in prison (Common Law is the old English system of fairness in business. It is the foundation of the US legal system and is enforceable in the US and most advanced nations). There is an even older legal principle that applies here and is still considered enforceable. It is the Eighth Commandment (7th in some traditions): "Thou shalt not steal."
So, to answer your question, I'm not seeing FCPA specifically coming to the forefront as the prosecution main weapon. Plain old fashion fraud will do. I am seeing a coming (arguably already here) convergence between legal but politically unpopular actions (like extreme raising of drug prices, shutting down vibrant R&D labs, pushing insured to use needless expensive products, etc.) and illegal actions (like accounting and insurance fraud). The executives will be sent to prison for clear law violations, but in the public consciousness, it will be the unpopular actions that are being punished. It will also set, in the mind of future executives, the notion that when you really push the limits on unpopular actions (no matter how legally defensible), there may well be a prison in your future.
Dan.
Dan and P551,
What should we know about analysts ratings and their work on companies like Allergan.
Ratings seem quite high, then again they loved VRX, you know, until they didnt.
Can you give us some perspective on looking at these guys, their environment, motivations etc?
Do they provide value for us in looking at AGNs future?
Hadnt seen anyone ask about these guys so appreciate any learning we can get from you here.
Thanks as always
What should we know about analysts ratings and their work on companies like Allergan.
Ratings seem quite high, then again they loved VRX, you know, until they didnt.
Can you give us some perspective on looking at these guys, their environment, motivations etc?
Do they provide value for us in looking at AGNs future?
Hadnt seen anyone ask about these guys so appreciate any learning we can get from you here.
Thanks as always
- Shoham Apr 23, 2016 at 03:41: PM
Shoham
Member
I can only speak for myself here.
I read what the analysts write. I pay attention to their arguments -- skeptically, yet open minded and non-judgementally. I give them the benefit of the doubt regarding any strictly factual assertions. However, as to their conclusions, I prefer to reach my own. Price targets, I consider a total joke. Whatever information (and even opinions) they present is already factored into the price. If the market is pricing the share differently than the 'target' than its proof that those who put money where their mouth is are not taking the target seriously.
Dan.
This is in line with what Dan taught us about discrepancy between stock price and deal premium
I read all analyst updates and reports. They are often full of a wealth of information and can contain reasonable summaries of key financial statistics. As far as price targets, I pretty much take their numbers with a grain of salt. In my opinion the analysts are trailing indicators not leading indicators. More often than not the share price movement will be followed with a reactive analyst update, rather than a predictive update prior to share price movement. With regard to share prices, it's rear view mirror analysis. But there is value in many of the reports and consensus numbers are often a good indicator of market sentiment.
P551
- mbryan Apr 25, 2016 at 08:13: AM
Congratulations to Dan and the rest of the participants on this thread on reaching 1000 posts and still going. The thread is a great example of how cafepharma users can help educate and inform each other - particularly during the difficult times and rapid transitions taking place in our industry.
We believe that often the best information and ideas come from employees and interested third parties. Much of the information in this thread supports that belief.
We believe that often the best information and ideas come from employees and interested third parties. Much of the information in this thread supports that belief.
Congrats Dan and all thread contributors!!! We got the attention of CP staff in a positive way
. Could agree more with the sentiment - throughout the Valeant episode and then Pfizer, this has been a wonderful resource!Hi Dan,
I don't have any direct vested interest in either Valeant or Allergan but I got into this thread and found the information fascinating as well as very accurate.
Your previous post(s) noted the real risk of Valeant being able to file an audited statement which PWC will sign off on by April 29th that will be satisfactory to the analysts/share-holders. You were skeptical that a clean audited financial statement will come out of Valeant by this time-frame. Either they will delay or report some unpleasant finding that will further pressure the stock, or at least that's the perception I got from reading the posts.
After reading the information, I concur that unless they had concerns they can file by April 29th, they would not have offered additional money to the bond-holders, of which the amount wasn't trivial.
With that said, is there any changes to your thoughts based on Joseph Papa hiring? He doesn't come from a top tier pharma, but still you would think he had a chance to fully digest the numbers that will be coming out as well as the potential impact. If he wasn't convinced that Valeant can file an acceptable audited statement that shows viability of the company over at least the short term, why would he drop a job he held for over 10 years to jump into this circus that is Valeant? Of course he likely received a large golden parachute that will reward him regardless of whether he can turn around the company or not, but I'm thinking he at least doesn't see an immediate issue?
I'd appreciate any thoughts on Joseph Papa leaving Perrigo (after he aggressively fended off a hostile takeover attempt by Mylan) and whether that changes your perception that Valeant will file an "acceptable" audited statement that has been delayed.
Thanks in advance.
I don't have any direct vested interest in either Valeant or Allergan but I got into this thread and found the information fascinating as well as very accurate.
Your previous post(s) noted the real risk of Valeant being able to file an audited statement which PWC will sign off on by April 29th that will be satisfactory to the analysts/share-holders. You were skeptical that a clean audited financial statement will come out of Valeant by this time-frame. Either they will delay or report some unpleasant finding that will further pressure the stock, or at least that's the perception I got from reading the posts.
After reading the information, I concur that unless they had concerns they can file by April 29th, they would not have offered additional money to the bond-holders, of which the amount wasn't trivial.
With that said, is there any changes to your thoughts based on Joseph Papa hiring? He doesn't come from a top tier pharma, but still you would think he had a chance to fully digest the numbers that will be coming out as well as the potential impact. If he wasn't convinced that Valeant can file an acceptable audited statement that shows viability of the company over at least the short term, why would he drop a job he held for over 10 years to jump into this circus that is Valeant? Of course he likely received a large golden parachute that will reward him regardless of whether he can turn around the company or not, but I'm thinking he at least doesn't see an immediate issue?
I'd appreciate any thoughts on Joseph Papa leaving Perrigo (after he aggressively fended off a hostile takeover attempt by Mylan) and whether that changes your perception that Valeant will file an "acceptable" audited statement that has been delayed.
Thanks in advance.
"Valeant Pharmaceuticals' Business Model: Repercussions for Patients and the Health Care System" -- catchy title of the hearing scheduled by the Senate Committee on Aging, starting time 27 April at 3:30 pm EST.
Besides Runaway CEO Pearson, they have also announced that Schiller and Ackman will both be appearing, under subpoena. Should be interesting hearing the Tone from the Top on full finger-pointing display.
Besides Runaway CEO Pearson, they have also announced that Schiller and Ackman will both be appearing, under subpoena. Should be interesting hearing the Tone from the Top on full finger-pointing display.
Link for taped hearing: http://www.aging.senate.gov/hearing...sions-for-patients-and-the-health-care-system
Brief: Panel 1 patient and drs complaining over price increases of 4 older drugs
Panel 2 Pearson, Ackman and Schiller apologizing. Blame the 80% drop in stock
price on making bad pricing decisions. Good PR but untrue.
90% was on price increases, patient suffering and greed. No discussion re: Philador or fraud. Ackman probably took this as a win.
Best parts were questioning from Collins twice, McCaskill twice and Elizabeth Warren (says coupons have a pharma ROI of 5 to 1 and Pearson looks completely clueless) Was hoping for a better show but not bad for govt work. They scratched the surface just a little on pharma drug pricing. Most Republicans didnt bother to show up- maybe a rep had lunch for them.
Brief: Panel 1 patient and drs complaining over price increases of 4 older drugs
Panel 2 Pearson, Ackman and Schiller apologizing. Blame the 80% drop in stock
price on making bad pricing decisions. Good PR but untrue.
90% was on price increases, patient suffering and greed. No discussion re: Philador or fraud. Ackman probably took this as a win.
Best parts were questioning from Collins twice, McCaskill twice and Elizabeth Warren (says coupons have a pharma ROI of 5 to 1 and Pearson looks completely clueless) Was hoping for a better show but not bad for govt work. They scratched the surface just a little on pharma drug pricing. Most Republicans didnt bother to show up- maybe a rep had lunch for them.
Link to hearing: http://www.aging.senate.gov/hearing...sions-for-patients-and-the-health-care-system
Synopsis: 2 panel hearing, first with drs and a patient complaining over drug price increases and then the 3 blind mice apologizing for being so careless
Philador and fraud never discussed. Best parts were questioning from Collins, McCaskill,
and Warren. Interesting to see Ackman at work. Most Republicans didnt show up -
maybe they had a rep doing lunch for them.
Synopsis: 2 panel hearing, first with drs and a patient complaining over drug price increases and then the 3 blind mice apologizing for being so careless
Philador and fraud never discussed. Best parts were questioning from Collins, McCaskill,
and Warren. Interesting to see Ackman at work. Most Republicans didnt show up -
maybe they had a rep doing lunch for them.
The investigation is still not concluded. The Republican Senator concluded this hearing by reminding the witnesses that the Committee members have until May 6 to submit additional questions to be answered for the record.
I for one, would like to know how Ubben and Morfit seemed to slip the noose. They know more than Ackman.
I for one, would like to know how Ubben and Morfit seemed to slip the noose. They know more than Ackman.
Dan, was hoping to get your thoughts on Valeant's 10-K and proxy? (Admittedly a lot to go through, and obviously you have a day job and family, so many many thanks in advance!)
Shhhh...Word on the street is that GSK is looking for a partner. Rumor has it that if talks go well, mid-2017 will be the announcement date. Keep it on the DL.
We're about to drop under $200 - what's going on? Is this a leak ahead of Q1 earnings?
So much for value creation!
So much for value creation!