September 23, 2014
By Riley McDermid, BioSpace.com Breaking News Sr. Editor
Cosmetic drug maker Allergan (AGN) has been dealt another legal setback in its quest to fend off a $53 billion hostile takeover from Canadian drugmaker Valeant, after a judge in California ordered the company to turn over its complete records of recent board meetings and strategic documents.
Allergan has spent all summer battling with activist hedge fund investor Bill Ackman, a major shareholder in the company, who has been heavily involved in the effort to force Allergan to accept a $53 billion bid for the company from Valeant.Ackman’s $15 billion hedge fund Pershing Square Capital Management is a top shareholder in Valeant, which has been attempting a hostile takeover of Allergan since April. Valeant quickly upped its offer over a series of weeks and eventually launched a tender offer.
Both companies have been using the legal system to force their points. In August, Allergan sued the two companies, alleging their cozy relationship has run afoul of insider trading regulations. Ackman owns 9.7 percent of Allergan, an amount the company has asked a court to disqualify as counting towards a 25 percent shareholder quorum.
Monday’s ruling by U.S. District Judge David Carter of Santa Ana, Calif., rejected Allergan’s legal arguments that the documents would expose its strategy for thwarting hostile suitors. The Latham & Watkins, Richards, Layton & Finger, P.A. and Wachtell, Lipton, Rosen & Katz as legal counsel.
Allergan has already had to concede that 35 percent of its shareholders have asked for a special meeting with management slated for Dec. 18., during which the takeover bid is likely to be heavily favored.
The shareholders involved only own around 2.8 percent of Allergan but they meet the threshold under U.S. securities law, which requires 25 percent of a company’s investors are needed to call a special meeting for shareholders.
