Proxy Firm ISS Urges Allergan For Shareholder Vote

(RTTNews) - Investor shareholder advisory firm ISS Wednesday urged botox maker Allergan Inc. (AGN) to put for shareholder vote any deal that might halt the takeover attempt by Canada-based Valeant Pharmaceuticals Inc. (VRX, VRX.TO).

Proxy advisory firm Institutional Shareholder Services said Allergan's board will lose its credibility with shareholders if they continue to rebuff takeover attempts from Valeant and attempt to halt deal.

According to last month's media reports, Allergan is in advanced talks to buy Salix Pharmaceuticals Ltd. (SLXP) for over $10 billion in cash, since it would not require a shareholder vote. It would also help Allergan fend off a $53 billion hostile bid from Valeant, as the deal would become too big for Valeant.

Allergan agreed to unconditionally call and hold a special meeting of its shareholders on December 18, however the Salix deal might be completed before the special meeting. At the special meeting, William Ackman's Pershing Square plans to rejig the Allergan board and push forward the takeover bid. Pershing Square is the largest shareholder in Allergan with a 9.7 percent stake.

"To point out that the board has authority to approve an all-cash acquisition without shareholder approval is to point out the irrelevant: the question is not what the board can do, but what the board should do," ISS said in a report.

Only few days ago, Mutual fund T. Rowe Price Inc (TROW) criticized Allergan's board over its corporate governance practices and sought shareholders vote on acquisitions. T. Rowe is Allergan's second-largest shareholder with a 5.4 percent stake. Another shareholder Pentwater Capital Management also urged Allergan not to seek any deal that would block the Valeant's takeover without shareholder approval.

Valeant had first approached Allergan with a takeover offer of $46 billion in cash and stock and sweetened its bid to about $53 billion. However, Allergan repeatedly spurned the attempts 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.

AGN closed Wednesday's trading at $179.67, up $1.48 or 0.83%, on the NYSE. The stock further gained $0.44 or 0.24% in the after-hours trade.

VRX closed Wednesday's trading at $131.67, up $0.47 or 0.36%, on the NYSE. The stock, however, dropped $1.05 or 0.80% in after-hours trade.