Court Says Valeant, Pershing Square May Vote In Allergan Dec.18 Stockholder Meet

(RTTNews) - Canadian drugmaker Valeant Pharmaceuticals International (VRX, VRX.TO), which is pursuing botox maker Allergan Inc. (AGN), said the United States District Court for the Central District of California held that Pershing Square Capital Management, L.P., Valeant and related parties may vote shares of Allergan or proxies at the upcoming December 18 stockholder meeting.

Allergan had sought to disenfranchise its largest shareholder, Pershing Square Fund 1, along with other shareholders solicited by Pershing Square Fund 1, by seeking an injunction to prevent them from voting at the special meeting.

The ruling by Judge David Carter means all Allergan shareholders, including Pershing Square Fund 1, will be permitted to have their voices heard by voting.

Allergan is being pursued by Valeant for months now. Valeant, along with billionaire investor William Ackman's hedge fund Pershing Square, started a takeover battle in April by making a bid to acquire Allergan for $46 billion in cash and stock. Pershing Square is the largest shareholder in Allergan with a 9.7 percent stake.

Valeant later sweetened its bid to about $53 billion. However, Allergan repeatedly spurned the offers stating it grossly undervalued the company. Allergan called Valeant's business model unsustainable and said that a deal with Valeant would hurt its research and development program.

Last week, Valeant said it is prepared to improve its offer and provide a value of at least $200 per share to Allergan shareholders.

The latest offer was made on the day Allergan announced its quarterly results, which prompted Allergan to state that Valeant's letter was simply a tactic to distract investors from Allergan's outstanding third-quarter results.

Allergan said Monday that it has been approached by another party regarding a potential transaction.

Meanwhile, Allergan said Tuesday that the Court found that Allergan raised serious questions as to whether Valeant and Pershing Square violated an SEC rule, which prohibits trading on the basis of material nonpublic information when an offering person has taken a substantial step or steps to commence a tender offer of a target company.

According to Allergan, the Court found Allergan's argument "persuasive because, in promulgating Rule 14e-3, the SEC was concerned about the practice of 'warehousing' ... because such a practice is unfair to investors who are trading at an informational disadvantage."

Warehousing is the practice of the tender offer or intentionally leaking information to institutional investors to allow those other entities to make early trades before other investors heard about the tender offer.

Allergan said it is pleased that the Court ruled there are serious questions as to the merits of Allergan's insider trading case against Pershing Square and Valeant, and ordered them to revise their disclosures to reflect the truth behind their hostile acquisition plan.

VRX closed up 0.6 percent on Tuesday at $133.61. AGN, which closed up over 1 percent at $195.12, fell nearly 1 percent in the extended trade.