Will Platform Specialty Products Corp (PAH) Keep Growing With Bill Ackman Going Activist on the Company?

Bill Ackman is bullish on Platform Specialty Products Corp (NYSE:PAH) and with his recent activist move on the stock, the company could grow even further. Pershing Square, the fund led by Mr. Ackman, has disclosed in a filing with the Securities and Exchange Commission, that it has acquired over 9.4 million shares of Platform Specialty Products at a price of $25.59 per unit. Following the increase, the investor holds nearly 42.74 million shares, the activist stake amassing 26.1% of the company.

Bill Ackman in crowd

Mr. Ackman went bullish on Platform Specialty Products right after the company went public at the end of January. Pershing Square first reported ownership of some 29.1 million shares of the company, equal to roughly 22% of the stock. Later in March, the fund exercised its warrants and added around 4.2 million shares to its position. The last 9.4 million shares have been acquired under an agreement with the company. Platform Specialty Products Corp (NYSE:PAH) agreed to sell around 25.47 million shares of the company to some certain investors.

Moreover, as disclosed in the latest filing, Pershing Square has a representative on the company’s board of directors. With gaining such a substantial investment in Platform Specialty Products Corp (NYSE:PAH), Mr. Ackman said that it might engage in discussions with the company regarding the company’s board composition, management, business, financial condition and other matters related to the shareholder value of the company.

Moreover, while Pershing Square is the largest institutional investor in Platform Specialty Products Corp (NYSE:PAH), other investors also have been raising their exposure to the company. Blue Ridge Capital, led by John Griffin, also added the company to its equity portfolio shortly after the IPO and currently owns 9.0 million shares of the company, while Brian Bares‘ Bares Capital Management holds approximately 2.76 million shares, according to its latest 13F.

So far, investors bets on Platform Specialty Products Corp (NYSE:PAH) have been rewarded. The stock of the $3.7 billion company surged by 79% since the IPO. The producer of specialty chemicals has had performing well over the last several quarters and managed to expand its business. Since its IPO, Platform Specialty agreed to acquire the agrochemicals business from Chemtura, paying around $1.0 billion for the deal. Moreover, recently, the company completed the acquisition of the European agrochemicals group Agriphar for around $380.5 million, and according to the latest rumors, the company also plans to buy Arysta LifeScience.

Mr. Ackman has been probably the second-greatest activist investor on the street after Carl Icahn. Over the years, Mr. Ackman proved his talent in engaging other companies to make changes and increase their shareholder value. One company that comes to mind is Canadian Pacific Railway Limited (USA) (NYSE:CP), which managed to turn around due to Mr. Ackman’s involvement. The investor contributed to the company changing its CEO and board of directors after a long proxy fight and since those changes, the stock of Canadian Pacific Railway Limited (USA) (NYSE:CP) surged by over 180%.

Currently Mr. Ackman is engaged with some other companies, among which, the most widely-discussed is the proxy fight with Allergan, Inc. (NYSE:AGN), which Mr. Ackman tries to acquire together with Valeant Pharmaceuticals Intl Inc (NYSE:VRX). 

In conclusion, Platform Specialty Products Corp (NYSE:PAH)’s expansionist strategy, combined with the stock price, which is cheaper than many of its competitors from the specialty chemicals industry and Mr. Ackman’s activism, make Platform Specialty Products an interesting investment opportunity for smaller investors as well.

Disclosure: none