Delaware Chancery Court Grants Bid to Fast-Track Valeant-Allergan Case

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By Jef Feeley

Aug. 27 — Valeant Pharmaceuticals International Inc. and Bill Ackman's Pershing Square Capital Management Aug. 27 won a bid to fast-track litigation that seeks to force Allergan Inc. to hold a shareholder meeting as part of their $54 billion takeover bid.

After a hearing, the Delaware Court of Chancery's Andre Bouchard set an Oct. 6 trial date to decide whether Valeant and Ackman properly secured the support of enough Allergan stockholders to force a special meeting to consider replacing a majority of the company's directors. The pharmaceutical company and hedge-fund manager want to clear the way for their takeover bid for the maker of the Botox anti-wrinkle cream.

Bouchard's ruling may mean Allergan officials, who have rejected the buyout offer, will be forced to hold the investor meeting earlier than the Dec. 18 date the Irvine, California- based company announced Aug. 26.

Allergan shareholders' potential loss of their right to vote on whether to accept Valeant's and Ackman's cash-and-stock bid created “a risk of irreparable harm” that required the Delaware lawsuit to be handled on an expedited basis, Bouchard said.

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 that includes cutting 1,500 jobs.

Advisory Groups

Two shareholder advisory groups have recommended Allergan investors back the special meeting pushed by Ackman. The activist investor wants to add six Allergan board members and push through the deal with Valeant. Valeant has offered $72 in cash and 0.83 of a Valeant share for each Allergan share.

Valeant and Pershing Square officials said they delivered papers Aug. 22 indicating that more than 30 percent of Allergan shareholders back a special investor meeting.

The pharmaceutical maker and the hedge fund sued in the chancery court Aug. 22 asking Bouchard to find that they had complied with Allergan's bylaws in lining up stockholder support for their meeting request.

Allergan had proposed a Nov. 24 trial on whether the company's suitors had properly provided documentation on shareholders' support for the special meeting.

In their haste, the investors “are attempting to deprive stockholders of material information regarding their alleged insider-trading violations and impede the Allergan board's ability to consider strategic alternatives,” according to an Allergan statement sent by Scott Bisang, of the Joele Frank public relations firm in New York.

‘No Games'?

Laurie Little, a Valeant spokeswoman, and Francis McGill, a spokesman for Pershing Square from Rubenstein and Associates, both declined to comment.

Lawyers for Valeant and Ackman told Bouchard Aug. 27 they were concerned that Allergan executives were dragging their feet in setting a trial date on the meeting request to provide time for an alternative buyer to make a bid. The drugmaker approached Salix Pharmaceuticals Ltd. in recent months about making a bid, people with knowledge of the matter have said.

Valeant and Ackman are worried that a deal “could be forced upon shareholders” without a vote, David McBride, one of Ackman's lawyers, told Bouchard.

Allergan officials aren't seeking to delay a trial over Valeant and Ackman's push to force a special shareholder meeting and to properly set a date for the gathering in December, countered William Savitt, one of the drugmaker's lawyers.

“There's no games here,” he said. Allergan officials simply need time to review Valeant and Ackman's submissions backing up the meeting request. “It's not true that we are avoiding a timely trial date at all costs.”

Allergan's Lawsuit

Bouchard said Valeant and Ackman raised legitimate doubts about whether the Dec. 18 meeting date was firm. “It's pretty apparent to me that Allergan may not want to have a special meeting at all.”

Earlier this month, Allergan sued Valeant and Ackman in federal court in California claiming the drugmaker colluded with the hedge-fund manager to profit from insider trades tied to the takeover bid.

U.S. District Judge David Carter in Santa Ana, California, last week denied Allergan's request for an expedited hearing for its insider trading lawsuit, clearing the way for Valeant and Ackman to begin an effort to force Allergan officials to schedule the shareholder meeting (Allergan Inc. v. Valeant Pharm. Int'l, Inc.,C.D. Cal., No. 8:14-cv-01214, complaint filed 8/1/14).

Allergan Aug. 26 filed another request with Carter for expedited handling of its complaint and said it's seeking a court order to prevent Valeant, Pershing Square and Ackman from voting their shares in any special meeting.

Allergan fell $1.87, or about 1 percent, to $162.09 after Bouchard's ruling was announced Aug. 27. The drugmaker's shares have risen more than 84 percent during the past 12 months.

To contact the reporter on this story: Jef Feeley in Wilmington, Del. at

To contact the editor responsible for this story: Michael Hytha at

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