THE dark arts of investment banking were brutally exposed yesterday as Allergan, the US healthcare group fighting off a $53bn (£31.2bn) hostile bid from a rival Valeant Pharmaceuticals, released emails designed to embarrass Morgan Stanley, the US investment bank that is now advising its unwanted suitor.
The emails show that just a few weeks ago, Morgan Stanley was only too happy to work on a project to convince investors that Valeant itself was a “house of cards”.
Publication of the emails is embarrassing for the bank because, having failed to be taken on by Allergan’s defence team, it is now advising the other side on its contentious bid.
In one email, David Horn from Morgan Stanley writes: “Part of what Rob (Kindler) is suggesting (to Allergan) is to allow him to use his significant relationship with media and analysts to provide a clear and detailed articulation of why Valeant is a house of cards and your investors should not want to take stock.”
Kindler is the bank’s vice chair and global head of M&A.
Morgan Stanley is now working alongside Barclays and RBC, the Canadian bank, for Valeant. The bank declined to comment.
Some said the unusual publication of Morgan Stanley’s emails illustrated the desperation of Allergan’s defence.
Allergan, led by Glaswegian chief executive David Pyott, is best known for its Botox products.
One of the banks now working for Allergan has its own history of being involved with both sides. Only last year Goldman Sachs was instrumental in advising on a large-scale equity issue for Valeant.
David Horn, Managing Director,
Investment Banking Division (Healthcare), Morgan Stanley
Email to Jeff Edwards, May 18, 2014
“Part of what Rob (Kindler) is suggesting (to Allergan) is to allow him to use his significant relationships with media and analysts to provide a clear and detailed articulation of why Valeant is a house of cards and your investors should mot want to take their stock”