William Ackman's Pershing Square Capital Management L.P. announced Friday that it has filed a lawsuit in the Delaware Court of Chancery seeking a declaratory judgment confirming that its actions in connection with the solicitation and receipt of revocable proxies to call a special meeting of shareholders of Allergan Inc. (AGN: Quote) will not trigger Allergan's recently adopted poison pill.
Allergan's defensive reaction to the business combination transaction proposed by Valeant Pharmaceuticals International Inc. (VRX: Quote,VRX.TO: Quote) has raised speculation that Allergan might try to assert that a shareholder's compliance with the unprecedented procedures in Allergan's bylaws somehow triggers the poison pill. Using a poison pill to silence shareholders or prevent them from exercising their voting rights is unlawful.
In light of Allergan's actions to date, and in order to remove any concern shareholders might have in participating in calling for a special meeting, Pershing Square said it had no alternative but to take this action.
The lawsuit followed a request by Pershing Square on June 6, 2014 to Allergan seeking confirmation that Allergan would not use its poison pill to frustrate its own bylaws and impede the calling of a special meeting. A response from Allergan's counsel on June 11, 2014 failed to provide the confirmation requested.
"We regret that we were forced to file this lawsuit. 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 views and exercise their rights," said William Ackman, CEO and founder of Pershing Square, which is the largest shareholder in Allergan with a 9.7 percent stake.
Last week, Pershing Square Capital Management said it was seeking to remove six members of the current Board of Directors of Allergan at a special meeting of shareholders.
On Tuesday, Botox maker Allergan said that its board unanimously rejected a sweetened $53 billion takeover bid from Canadian drug maker Valeant Pharmaceuticals and billionaire investor William Ackman's hedge fund Pershing Square Capital Management, L.P. Allergan noted that the revised unsolicited proposal substantially undervalued the company as well as created significant risks and uncertainties for its shareholders.
In late May, Valeant Pharma sweetened its takeover bid for Allergan for the second time in a week, currently offering about $53 billion in cash and stock. Under the latest offer, Allergan shareholders would get $72 per share in cash and 0.83 of Valeant stock.
Earlier, Valeant had raised its unsolicited bid for Allergan to about $50 billion, but that move had impressed neither Allergan nor investors.
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by RTT Staff Writer
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