What is 'Acting In Concert'

Acting in concert is a slang term for when parties undertake identical investment actions to achieve the same goal. Acting in concert requires the cooperation of people or corporations to make the same transactions based on a previous arrangement.

BREAKING DOWN 'Acting In Concert'

The issue of acting in concert is often examined in the world of acquisitions. Investors are usually required to declare any takeover intentions or place a tender offer after acquiring a specific percentage of shares in a company. However, some may try to spread the ownership percentage among friendly parties in an attempt to avoid declaring or bidding. Regulators have determined that if people are acting in concert and the sum of ownership exceeds the specified percentage, the group must declare its intentions. If investors believe their interests were harmed by others acting in concert, they may sue. This happened in the following high-profile case that began in 2014.

Example of Acting in Concert

It was alleged that Bill Ackman, leader of hedge fund Pershing Square Capital Management, and Michael Pearson, CEO of Valeant Pharmaceuticals International, acted in concert to try to purchase Botox maker Allergan Inc. in 2014. Ackman's fund independently accumulated a large position in Allergan and then teamed up with Valeant to bid for Allergan. Allergan, which did not want to be acquired by Valeant, and two state pension plans sued Ackman and Valeant for violating securiities laws on the grounds of insider trading. In the meantime, Allergan began putting together a deal with Actavis Plc to thwart efforts by Ackman and Valeant.

Actavis and Allergan did end up consummating a deal in March 2015, which delivered a huge investment gain to Ackman. He squandered those gains and more, however, after he reinvested the proceeds into Valeant, whose enormous debt levels and alleged fraudulent accounting practices sent investors fleeing. Valeant stock had soared over $250 per share in July 2015; when Ackman sold his shares in March 2017, they were trading at around $11 per share. Adding insult to injury, Ackman was forced to finally settle the outstanding lawsuit against him, paying $193.75 million. Valeant agreed to pay $96.25 million, the other portion of the $290 million total settlement. Acting in concert with Valeant was a painful experience for Bill and Michael.

RELATED TERMS
  1. Clandestine Takeover

    Clandestine takeover is an attempt to gain control over a company ...
  2. Creeping Tender Offer

    A creeping tender offer is a takeover strategy involving the ...
  3. Activist Investor

    An activist investor is an individual or group that invests in ...
  4. Securities Act Of 1933

    The Securities Act Of 1933 is a federal piece of legislation ...
  5. Blanket Additional Insured Endorsement

    A blanket additional insured endorsement automatically provides ...
  6. Williams Act

    The Williams Act was passed in 1968 to protect shareholders and ...
Related Articles
  1. Insights

    Valeant Investment Was a 'Huge Mistake'

    Bill Ackman has called his investment in Valeant a mistake, saying he misjudged the ability of Valeant’s former management team.
  2. Investing

    Allergan: An Activist Investment Analysis (AGN,VRX)

    Read about the activist investor campaign against Allergan by Bill Ackman. See how Ackman partnered with another drug company in a hostile takeover bid.
  3. Investing

    Can Donald Trump Make Valeant Stock Great Again? (VRX, XLV)

    Shares of Valeant have been under heavy selling pressure over the past month, plunging as much as 27% from around $22 to Friday's close of $15.45.
  4. Investing

    Top 5 Positions in Bill Ackman's Portfolio

    Find out which stocks hold the top five positions in Bill Ackman's investment portfolio, and where he is waging his biggest boardroom battles.
  5. Investing

    Valeant Falls As Barclays Sees 'No Short-Term Fix' (VRX, WBA)

    Beyond poor deals, Valeant's acquisition spree, which has ballooned its debt level to over $31 billion, remains a drag on ways to solve its cash problems.
  6. Investing

    Pershing Square Trims Mondelez, APD and Obviously Valeant: 13F Filing

    Apart from its notorious dumping of Valeant stock, the firm cut its holdings in snack maker Mondelez and Air Products and Chemicals.
  7. Insights

    Valeant Shares Plunge Amid Criminal Probe (VRX)

    Federal prosecutors have launched a criminal investigation to determine whether Valeant defrauded insurers.
  8. Investing

    Ackman's Bad Bets Costs $600 Million in Redemptions

    If Ackman's losing streak continues, his investors may begin to factor in their own poor decisions to stick with him.
  9. Investing

    Valeant Stock Attracting More Short Sellers (VRX)

    With $31 billion in debt crippling the company, combined with limited routes to grow revenue, short sellers see a solid opportunity to profit.
  10. Investing

    Why Valeant Stock Rose 5.5% Last Week

    The company is seeing positive signs so far in 2017, as its share performance beat the 1.7% rise in the S&P 500 Index.
RELATED FAQS
  1. How are investment banks regulated in the United States?

    Read about the extensive regulations placed on investment banks in the United States, beginning with the Glass-Steagall Act ... Read Answer >>
  2. A Hostile Takeover vs. Friendly Takeover

    Learn about the difference between a hostile takeover and a friendly takeover, and understand how proxy fights and tender ... Read Answer >>
Trading Center