Allergan Claims Bill Ackman, Valeant Pharmaceuticals Hatched Improper Insider Trading Scheme
August 4, 2014
By Krystle Vermes, BioSpace.com Breaking News Staff
Allergan, Inc. , the company responsible for Botox, is suing Valeant Pharmaceuticals International for breaking insider trade regulations.
Allergan believes that William Ackman of Pershing Square Capital Management LP plotted with Valeant to allow the hedge fund to purchase shares of Allergan. This comes just before Valeant positioned itself to take over Allergan for approximately $53 billion.
Ackman is the largest investor of Allergan. The lawsuit demands that he gives back the stock in Allergan that he owns.
Since the beginning, Ackman has shrouded himself in suspicion. This past April, Pershing Square acquired 25.4 million Allergan shares for $3.2 billion, according to Bloomberg. Shortly after, Allergan surged 15 percent upon news of the company takeover, which resulted in a $1 billion gain for Ackman.
However, Ackman strongly feels that the lawsuit is unwarranted. The billionaire is aiming to hold a special Allergan shareholder meeting to vote on the board of directors. He views this legal battle as a means of delay.
“This is a shameless attempt by Allergan to delay the shareholders’ fundamental right to call a special meeting,” Ackman told Reuters. “Allergan’s determination to waste money on a baseless lawsuit against its largest shareholder further demonstrates why this board of directors should be removed.”
Allergan has been reportedly fighting the acquisition by Valeant since the proposal for a takeover was first made in April. Now that it has filed a suit against Valeant and Ackman, Allergan may have bought itself more time.
Erik Gordon, a professor of law and business at the University of Michigan, recently spoke to Reuters about the legal battle. He claimed that Ackman may not be able to easily dismiss the claims against him, and doing so will cost him both time and money.
It’s also worth noting that Allergan’s claims against Ackman could make it tougher for his firm to attract investors in the future.
Aside from Ackman, Allergan claims that Valeant is not in an ideal position to purchase the company. Since 2008, Valeant has racked up $17.3 billion worth of debt through past acquisitions. Allergan states that Valeant relies on constant acquisitions get by, which makes it far from stable. The company goes on to state that because it has little debt and $1.5 billion on its balance sheet, it has become a prime target for Valeant. Furthermore, Allergan believes that Pershing Square has given Valeant the financial assistance it needs to go after the company.
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