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Why Valeant's New CEO Could Be An Allergan Exec

Why Valeant's New CEO Could Be An Allergan Exec
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Valeant Pharmaceuticals Intl Inc (NYSE: VRX) is trending amid the company's report it plans to move on from current CEO Mike Pearson. On Monday afternoon, analysts Shibani Malhotra and Austin Nelson at Nomura shared their short list of who would make sense to replace him.

"In our view, selecting an outsider with extensive industry experience as Pearson’s successor would enhance Valeant’s credibility," they wrote. Their top pick, according to this logic, would be former Allergan CEO David Pyott, who was the CEO of the company between 1998 and 2015 before it sold itself to Actavis. The company later changed its name to what now constitutes the publicly-traded Allergan (NYSE: AGN).

Related Link: Valeant Announces CEO Succession Plans And Financial Update; Bill Ackman Joins Board

Pershing Square's Bill Ackman, who joined Valeant's Board on Monday morning, made a profit of $2.6 billion on Allergan shares in 2014, according to Dealbook. Ackman bought the stock at an average price of $129.28 per share and sold when Allergan traded near $219.

Though Nomura's new analysis doesn't make any specific commentary about Ackman, the connection is obvious. Before Allergan's transaction with Actavis, Ackman pushed the company to sell itself to Valeant in 2014, Reuters reports.

If Pyott doesn't make sense at Valeant's helm, or doesn't want to do the job, Nomura thinks current Allergan CEO Brent Saunders or Executive Chairman Paul Bisaro are "strong potential candidates," along with ex-Allergan President Doug Ingram.

Outside of Allergan, the analysts added that former Hospira CEO Michael Ball, Warburg Pincus Managing Director Fred Hasan and Sanofi CEO Chris Viehbacher would also make sense. "We believe the naming of any of these potential candidates as Pearson’s successor would enhance Valeant’s credibility," they concluded.

Nomura, who held a Buy rating on Valeant with a $220 price target last October, downgraded its rating to Neutral with a $60 target on March 16.

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Apr 2018MizuhoUpgradesUnderperformNeutral
Mar 2018Deutsche BankUpgradesHoldBuy
Jan 2018Goldman SachsInitiates Coverage OnSell

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