VRX Stock: How Valeant Got Duped by Allergan PLC

valeant stockValidation and a Couple Wins for VRX Stock 

Valeant Pharmaceuticals Intl Inc (NYSE:VRX) must be feeling some measure of validation as the U.S. Securities and Exchange Commission (SEC) has levied a $15.0 million fine at Allergan plc (NYSE:AGN) for failing to disclose news of friendlier bids during a hostile takeover attempt by Valeant.

VRX stock, meanwhile, has not benefited from the favorable ruling as the company has fallen seven percent over the past week.

Allergan is best known as the maker of the anti-aging treatment “Botox,” every comedian’s favorite punchline. Allergan reportedly fielded offers from Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) about a potential bid to fend off Valeant. The resultant failure to disclose ultimately cost the company the $15.0 million in fines rendered by the SEC. (Source: “Allergan Admits to Disclosure Violations During Valeant Bid,The Wall Street Journal, January 17, 2017.)

When the dust settled, Allergan was gobbled up by Actavis PLC (but kept the Allergan name), and Valeant made its move with a purchase of Salix. The deals were valued at $70.5 billion and $10.0 billion, respectively.

But that’s not all there is for VRX stock news. While the outlook for the shares at present is not the rosiest, there is some reason to be excited again about VRX stock if you’re bullish on the pharmaceutical giant.

Short positions in the stock have declined nearly 14% from a month ago, showing that—as far as the market is concerned—the stock may be settling down and less prone to steep dives. (Source: “Short Sellers Now Fleeing Valeant Stock (VRX),” Investopedia, January 17, 2017.)

Several deals including the sale of skin care products to L’Oreal SA (EPA:OR) and the sale of outstanding equity in Dendreon Corporation (OTCMKTS:DNDNQ) helped reassure the market that, while the company is still a long ways from paying down its massive $30.0 billion debt, the two deals valued at $2.12 billion have at least done enough to garner some manner of confidence in the beleaguered VRX stock, as evidenced by the lessening of short seller positions.

Whether VRX stock will be able to make a full recovery from its current ailing position is another question entirely. But, for now, Valeant lives to fight another day.