Allergan (AGN), Valeant and Pershing Capital Agree On Meeting

Shares of Allergan Inc. (AGN) were up +1.44 or +0.85 percent to $170.00 per share in premarket trading this morning, after the company announced late yesterday that an agreement had been struck between Valeant Pharmaceuticals (VRX) and Bill Ackman's Pershing Square Capital to proceed with a special shareholder's meeting. Allergan stock closed down -0.69 or -0.41 percent to $168.56 per share in Monday's regular trading session.

Irvine, California based Allergan Inc. is a diverse health care company specializing in biologics and pharmaceuticals and best known for being the producer of Botox wrinkle treatments.
The company was originally founded 60 years ago as an eye care company and has branched out to include medical aesthetics, neurosciences, breast aesthetics, medical dermatology, and urologics. The company employs 11,400 people in 100 countries around the globe and has a market cap of $50 billion.

Laval, Quebec based Valeant Pharmaceuticals International Inc. is a large pharmaceutical company, which spans the entire drug discovery pipeline. The company's research includes target identification, treatments through clinical trials and commercialization. Valeant focuses on infectious diseases, neurology and dermatology. The company is best known for producing the antidepressant drug, Wellbutrin XL.

New York City based Pershing Square Capital is a $13 billion hedge fund under the control of activist investor William Ackman. The company has acquired almost ten percent of Allergan Inc. investing over $4 billion in the company.

The companies have been embroiled in a $53 billion hostile takeover of Allergan by Valiant and Pershing Square since April. According to the agreement, the special shareholders meeting, set for December 18th will take place as planned, with Pershing Square and Valeant agreeing to settle litigation before the Delaware Court of Chancery.

The two companies had sued Allergan in Delaware to force the meeting, citing the company's by-laws were too onerous and which Allergan was trying to postpone. At the meeting, Valeant and Pershing will seek to remove a majority of the Allergan board in their attempt to take over the company. Pershing Square already owns 9.7 percent of Allergan stock. Valeant and Pershing Square claim they have the support of 35.7 percent of Allergan shares, the special meeting only requires they have 25 percent.

Allergan said in a statement yesterday, "Today's announcement eliminates the distraction and cost of unnecessary litigation over the company's bylaws and underscores the Allergan board of directors' long-standing commitment to providing stockholders with a forum to express their opinion on the value proposition offered by Valeant .

In a separate legal action filed in California, Allergan is suing for a preliminary injunction against Valiant and Pershing for alleged insider trading before the takeover bid. If Allergan prevails in the action, Valeant and Pershing Square will be barred from voting their Allergan shares at any stockholders' meetings.

The California lawsuit alleges that Pershing Square and Valeant made an end run to avoid insider trading laws in a concerted effort to acquire shares before the hostile bid. Pershing Square stated that, "Valeant and Pershing Square believe that Allergan's claims and request for relief in the California litigation are entirely without merit and will ultimately be rejected . Allergan stock is trading higher this morning, signaling shareholder optimism for the agreement.

Other News About Allergan
Judge to decide if Ackman can vote shares in Allergan takeover battle
Negating Ackman's shares would put voting shares supporting the takeover below 25 percent.
Will Allergan's Board Be Revamped to Aid Valeant Buyout?
Ackman intends to replace most members of Allergan's board.

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Microsoft to Buy Minecraft Maker Mojang for $2.5 Billion. This Is Why
Company intends to boost its Xbox and mobile business with the acquisition.
United Offers $100,000 Buyouts to Flight Attendants
Company offers buyouts to employees to rein in costs.

Published on Sep 16, 2014
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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