Allergan, Valeant Agree on December Meeting Over Hostile Bid

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By Anjali Cordeiro and Sophia Pearson

Sept. 16 — Allergan Inc. and its two hostile bidders, Pershing Square Capital Management LP and Valeant Pharmaceuticals International Inc., agreed the maker of Botox would hold a shareholder meeting Dec. 18 that could shape the outcome of their $54 billion takeover proposal.

Shareholders will be able to “express their opinion on the value proposition offered by Valeant,” Allergan said in a statement Sept. 16. Pershing Square and Valeant, which had objected to the date set by Allergan, agreed to dismiss a pending lawsuit in the Delaware Chancery Court ahead of a scheduled Oct. 6 trial. The agreement couldn't immediately be verified in court records (PS Fund 1 LLC v. Allergan Inc.,Del. Ch., C.A. No. 10057-CB, 9/2/14).

Valeant teamed up with investor Bill Ackman's Pershing Square to help drive the hostile takeover. The December meeting will allow Allergan shareholders to vote on whether to replace members of the drugmaker's board as part of the contentious takeover fight.

“Today's announcement eliminates the distraction and cost of unnecessary litigation,” Allergan said in the statement. The Irvine, California-based drugmaker also repeated its recommendation that holders “prevent Valeant from taking control of Allergan at a price that does not appropriately reflect the underlying value of Allergan's assets, operations and prospects.”

October Trial

The two sides have fought for months as Allergan repeatedly rejected Valeant's unsolicited offer. Ackman has sought the special meeting to remove most of the company's board and add six new directors.

Last month, the Delaware Chancery Court's Andre Bouchard set the Oct. 6 trial date to decide whether Ackman and Valeant had enough support from Allergan shareholders to force a special meeting before December.

Valeant, based in Laval, Quebec, wants to buy Allergan to expand its portfolio and become one of the world's largest drugmakers. David Pyott, Allergan's chief executive officer, has fought to keep the company independent, announcing a restructuring including cutting 1,500 jobs.

In a letter to Chancellor Bouchard on Sept. 14, Allergan said questions about Valeant's business model and practices were necessary at trial. The company said it had “substantial concerns” about Valeant's business model, its lack of commitment to research and development, its opaque accounting and the company's reliance on serial acquisitions.

Delivered Requests

Allergan directors were prepared to testify about the importance for shareholders to consider these issues in advance of a special meeting “as roughly 60 percent of the proposed merger” is in the form of Valeant stock, according to the letter.

Pershing Square has delivered requests calling for a special meeting from 51 institutions representing 35.68 percent of Allergan's common stock, it said in a joint statement with Valeant. Moreover, two shareholder advisory groups have recommended that Allergan investors back the special meeting pushed by Ackman.

At the December meeting, Allergan shareholders will have the opportunity to weigh in on issues such as a request that Allergan engage in negotiations with Valeant and Pershing Square, and the appointment of an independent slate of directors, Valeant and Pershing said in their statement.

Calls to Valeant, Pershing Square and Allergan went unanswered outside of regular business hours.

With assistance from Natasha Khan in Hong Kong and Jef Feeley in Wilmington, Delaware

To contact the reporters on this story: Anjali Cordeiro in Hong Kong at acordeiro2@bloomberg.net; Sophia Pearson in Philadelphia at spearson3@bloomberg.net

To contact the editors responsible for this story: Anjali Cordeiro at acordeiro2@bloomberg.net; Michael Hytha at mhytha@bloomberg.net

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