Icahnic

Carl Icahn just made half a billion dollars thanks to a deal driven by Obamacare

February 18, 2014
February 18, 2014

On a personal level, activist investor Carl Icahn doesn’t think the US healthcare overhaul known as Obamacare is all that bad.

“I think that Obama had to do something like that. I don’t think it’s that bad. I’m no expert on it, but I don’t think businesses should be a medical provider,” he told Fox News earlier this month, in a discussion about the healthcare law.

And on a professional level, the new law sure hasn’t been bad for business.

The 78-year-old corporate agitator’s hedge fund stands to reap some $555 million in paper gains this morning, after New York-based drugmaker Forest Labs agreed to be taken over by Actavis, a Dublin-domiciled generics giant, in a deal worth $25 billion. Icahn’s fund held an 11.4% stake in Forest Labs as of Dec. 31, according to filings.

As the Wall Street Journal (paywall) explains, part of the rationale behind this deal is to “position the resulting company to deal with the changing health-care landscape in the US.” The Affordable Care Act is expected drive consolidation among insurers and hospital groups. As they bulk up, they’d gain the upper hand in negotiations with pharmaceutical companies. The Actavis-Forest Labs combination is seen as an effort to counterbalance that trend.

Negotiating heft isn’t the only benefit of the tie-up, however. At the moment, Forest Labs products, which include branded treatments for constipation and depression, are mainly sold in the US market. With operations in 60 countries throughout Asia, the Middle East, Africa and Europe, Actavis will be able to distribute them to a wider audience. The combined group also expects to realize $1 billion in cost savings and tax benefits.

As for Icahn, he seems to have something of a  golden touch lately. Though he didn’t get everything he wanted from tech-giant Apple, he’s recently made a ton of paper profits on his investment in the iPhone maker. His heavily publicized spat with hedge fund manager Bill Ackman over nutritional products company Herbalife clearly went Icahn’s way. And he reportedly pocketed at tidy $800 million after selling some of his stake in Netflix.

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