Typically insightful analysis by Steven Davidoff of the "Faustian" bargain between Valeant Pharmaceuticals and William Ackman’s hedge fund to make a $45.6 billion unsolicited offer for Allergan.
One interesting point Davidoff makes is that:
Activists and corporations may team up on hostile takeovers, but the companies that join with activists may soon discover they are targets themselves.
Let's elaborate. There is a lot of evidence that, as Mark Mitchell and Kenneth Lehn put it, Bad Bidders Become Good Targets (98 J. Pol. Econ. 372 (1990)). This is so because studies of acquiring company stock performance report results ranging from no statistically significant stock price effect to statistically significant losses. In turn, poor performance by acquiring companies can be attributed to the fact that, by some estimates, bidders overpay in as many as half of all takeovers.
If a bidder/hedge fund team overpays, they thus will open themselves to attack by another bidder/hedge fund team. Ad infinitum.