Bill Ackman and Valeant offer $46bn for botox maker Allergan

Mr Ackman amassed a sizeable stake in Allergan over the last few weeks, building it from below 5pc to 9.7pc in the last two weeks alone, putting the board of the Botox-maker on stand-by for some sort of interference.

Typically, activist investors use their leverage to agitate for change, for example demanding a management clear-out, a new strategy and a number of board seats for their own nominees. The practice was relatively unknown before the downturn, but over the last few years it has become of the things the directors of public companies fear most.

The hedge fund manager, who heads Pershing Square Capital Management, hopes to be able to strong-arm Allergan into doing a deal, now that it has his weight behind it.

If the deal goes through, Valeant and Allergan would form a new pharmaceuticals behemoth, specialising in skin and eyecare medicines. The businesses were worth $42bn a piece before the offer was made public.

Allergan shot up in value by as much as a fifth on Tuesday, meaning that Mr Ackman has already made a considerable return on his investment. Shares in the company closed at $116.63 when Mr Ackman’s stake crossed the 5pc threshold on April 10th. Yesterday afternoon in New York, they were trading at $163.82.

However, there is a long way to go before he closes the deal. Analysts expect Allergan to resist the approach, leaving Mr Ackman and Valeant to appeal directly to shareholders to try and force a deal through.

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