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Allergan agrees to shareholder meeting on Valeant bid

Pershing Square Capital convinces shareholders to request consultation
allergan valeant logos

Allergan has indicated that it will hold a special shareholder meeting on December 18 as it continues to resists a hostile takeover attempt by Canadian rival Valeant.

The Botox manufacturer has been forced to go ahead with organising the meeting after major shareholder Pershing Square Capital, which is supporting Valeant's bid, managed to convince 31 per cent of Allergan's shareholders to request it, above the 25 per cent threshold needed.

Pershing and Valeant want to replace six members of Allergan's board with people more amenable to the takeover. Allergan has repeatedly rejected a series of offers from the Canadian firm which culminated in a $53bn bid in June.

Allergan claims that Valeant's business model of growth by acquisition and cost-cutting is not in the best interests of its shareholders and has reduced the value of previously-acquired assets such as eyecare specialist Bausch & Lomb.

A takeover by Valeant would wreak havoc with its promising R&D pipeline, according to Allergan, which last month implemented a restructuring programme to trim costs and boost profitability.

The increasingly acrimonious battle has seen lawsuits fly on both sides, with Allergan accusing Pershing Square owner Bill Ackman of insider trading in building up a 9.7 per cent stake in the company, while Valeant claims the US drugmaker has flaunted securities regulations by making false statements about its business.

Valeant and Pershing have been working hard to convince Allergan shareholders to push for a meeting since the US firm announced that doing so would not trigger a poison pill takeover defence. The two firms reportedly have delivered 1,500 pages detailing shareholder support to Allergan's headquarters in Irvine, California.

Last Friday, Valeant and Pershing filed another suit - this time trying to force Allergan to convene the special meeting - and it appears to have had the desired effect. However, Allergan insists that shareholder requests for a meeting are not necessarily endorsements of Valeant's bid.

"In fact, many stockholders have explicitly conveyed their view that the requests are not an endorsement of Valeant's offer," it said in a filing to the Securities & Exchange Commission (SEC) late last week.

Meanwhile, it has been suggested that legal wrangling could push the date of the meeting into 2015, after Valeant's bid deadline expires, and could also give Allergan more time to carry out a defensive acquisition of its own.

The company was recently linked to a possible takeover of Salix Pharmaceuticals, although negotiations are not thought to be ongoing at the moment.

Article by
Phil Taylor

27th August 2014

From: Sales

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