By Anna Prior
William Ackman's Pershing Square Capital Management L.P. has
asked a Delaware court to confirm that its recent push for a
special meeting of Allergan Inc. shareholders won't trigger the
Botox maker's poison pill.
Pershing has called for a special meeting of Allergan
shareholders in an effort to unseat six members of the board as
part of its takeover attempt with Valeant Pharmaceuticals Inc.
A representative for Allergan didn't immediately respond to
requests for comment.
The Botox maker has rebuffed the advances from Valeant and
Pershing and earlier this week rejected the latest takeover bid,
saying it substantially undervalues the company. Valeant boosted
its offer for Allergan late last month to about $52.7 billion in
cash and stock, partly thanks to Mr. Ackman's agreement to take a
price cut on his own stake.
Pershing is Allergan's largest shareholder with a 9.7%
stake.
Allergan's poison pill limits Pershing Square's stake to less
than 10% and could restrict talks between investors. Mr. Ackman had
sought confirmation from Allergan last week that its bid for a
special meeting wouldn't violate the provisions of the plan but
said he didn't get an adequate answer.
A poison pill, also known as a shareholder rights plan, is
designed to dilute the value of the stock by flooding the market
with additional shares, making it expensive for an investor to
acquire a controlling stake.
"We regret that we were forced to file this lawsuit," said Mr.
Ackman. "Allergan's failure to confirm that its poison pill does
not apply to the actions taken in furtherance of calling a special
meeting is a blatant attempt to frustrate shareholders' ability to
express their vies and exercise their rights."
The suit was filed in the Delaware Court of Chancery.
Since Valeant's bid for Allergan was first disclosed in April,
the companies have been engaged in a public war of words, and
Allergan adopted a poison-pill defense saying if any unapproved
investor acquires 10% or more of the company's stock, other
stockholders will have the right to buy discounted shares.
Valeant criticized Allergan's management for spending too
freely, particularly on research and development. Valeant, which
has promised that it would cut the combined company's R&D
spending by 69%, spends little on science, instead focusing on
buying established drugs and treatments and welling them through
its international network.
Allergan, meanwhile, has said Valeant's cost-cutting would
threaten future sales growth and R&D, putting the company at
risk. Allergan also questioned the stability of Valeant's business
model.
Write to Anna Prior at anna.prior@wsj.com
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