How Carl Icahn could create value with this health company, which has many valuable businesses

Bausch Health Companies Inc., formerly Valeant Pharmaceuticals International Inc., is a Canadian-based company that develops, manufactures and markets a range of branded and generic pharmaceuticals, medical devices and over-the-counter products. . It specifically improves outcomes in the therapeutic fields of eye health, gastroenterology and dermatology. Its dermatology products treat a range of conditions, including actinic keratosis, acne, atopic dermatitis, psoriasis and other dermatoses. It also offers a selection of aesthetic medical devices that treat a number of conditions, including facial wrinkles, acne, pigmentation condition and laser hair removal, among others. The gastrointestinal (GI) region offers products that treat GI and hepatologic conditions, including hepatic encephalopathy, infertile bowel syndrome with diarrhea and ulcerative colitis, among others. Its eye health products are marketed in the following categories: Contact Lens, Pharmaceutical Products and Surgery.

Stock market value: $ 11.3 billion ($ 31.93 per share)

Percentage property: 7.83%

Average Cost: $ 25.57

Executive Statement: Carl Icahn is a grandfather of shareholder activity and a true pioneer of strategy. While not slowing down at all, he recently reached an agreement with his son, Brett Icahn, to return to the company as his successor. Brett hired three portfolio managers to help him look for the company’s next executive target and this is Icahn’s first 13D filing since Brett went back to the company. Brett has said he intends to use his father’s preferred method of pushing companies to make changes designed to boost stock prices, though he hasn’t shrugged off a friendly bet. also. This is not a departure from the strategy that Carl has been successful with for several years. It can be friendly (i.e., Apple, Netflix) or it can be controversial (i.e., Forest Labs, Biogen), it often depends on a regulatory response. Brett is an impressive venture investor for himself, not because he is Carl ‘s son, but because he has a long history of highly successful venture capital investment. Much has been written about Sargon Package which he co-headquartered at Icahn, which at one time was approximately $ 7 billion and included highly profitable investments in companies such as Netflix Inc. and Apple Inc. Saragon Package did much better than the market with an annual yield of 27%. However, by that time Brett started in 2002 with Icahn as an analyst and later was responsible for initiatives such as Hain Celestial (280.3% return versus 46.7% for the S & P500), Take Two Interactive (81.5 % per 64.5%) and Mentor Graphics (106.4% vs. 79.4%).

Icahn plans to engage in discussions with the company’s management and board about ways to increase shareholder value, including the company’s ongoing strategic review.

In Bausch’s Icahn 13D, he states that he intends to enter into discussions with the Company on ways to increase shareholder value, including an ongoing strategic review. the company and potential board production. We believe he is deeply concerned about strategic opportunities. First, the language of board production is boilerplate language for Icahn 13D movies but the language is not about strategic analysis. Second, the board already has two 13D shareholder directors – Robert Hale of Value Act and John Paulson of Paulson & Co. Icahn is more likely to be interested in creating value through Bausch ‘s strategic dealings, which have been built on many builds over the years while working as Valeant.

Since Icahn ‘s filing, GlenD Capital, a 13D shareholder, has issued a letter to the company welcoming Icahn as an active shareholder and outlining its own plan for the company – the sale of inwards or portions of its high value assets, with a good image at fair prices to build equity and leverage offering property in flagship assets to the many capital pools that run a scarce number of growth options quality with moderate value. As Icahn mentions in its filtering, the company has already announced that it intends to separate its eye health business into an independent public trading entity from the rest of Bausch Health Companies Inc. at the end of 2021 and Glenview is supporting the sale of 40% of this business. to the public. The management said that they are examining different capitalization structures and the shape of the separation transaction to make proper capitalization of the two groups after separation. As Glenview suggests, there are also opportunities to create value by selling off other lines of business.

This is an area where Icahn could definitely add value. The eye care industry accounted for $ 3.7 billion of the company’s $ 8.6 billion in revenue in 2019. Icahn will certainly want to ensure shareholders get full value in the split, which could mean a sale of the business rather than a division. Who knows, perhaps the best value would come from selling the eye care and / or other Bausch businesses to SPAC? With the number of SPACs being launched these days, it is only a matter of time before they have to look at subsidiaries of public companies.

Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activity, and the founder and portfolio manager of 13D Operator Fund, a mutual fund that invests in a portfolio of 13D operator investments.