Activist investor William Ackman is looking to take Allergan (NYSE:AGN) to court to ensure that the company won’t activate it’s "poison pill" when prospective acquirer Valeant Pharmaceuticals holds its shareholder meeting.
Allergan’s board adopted the poison pill strategy in April in order to insulate the company from Valeant’s unsolicited and unrequited acquisition offer. The 1-year measure would trigger the release of a raft of purchase rights, significantly diluting Allergan shareholders, should any one investor take 10% or more of the the company. Pershing acquired 9.7% of AGN’s shares in April.
Ackman’s Pershing Capital Management filed a lawsuit this week after lawyers for Allergan and Pershing exchanged a couple of letters regarding the potential enactment of the poison pill. Pershing filed the suit, the company said, to alleviate shareholder concerns that a meeting may trigger the dilution measure.
Pershing needs the support of 25% of Allergan’s shares to hold the meeting, but the investors wants to ensure that Allergan won’t view the group as a single unit for the purposes of triggering the poison pill. In a response to Pershing, Allergan’s lawyers said that attempts to form a consensus for the purposes of holding the meeting should not, alone, trigger the poison pill, but Pershing wants to see the matter made certain in court.
"We regret that we were forced to file this lawsuit," Ackman told Law360.com. "Allergan’s failure to confirm that its poison pill does not apply to the actions taken in furtherance of calling a special meeting is a blatant attempt to frustrate shareholders’ ability to express their views and exercise their rights."
The lawsuit comes just days after Allergan’s board unanimously rejected Valeant’s twice sweetened bid to acquire the Botox-maker for $53.3 billion. The company has been swatting back Valeant’s attempts for weeks, starting with the initial $47 billion bid made in April.
AGN’s shares were trading at $162.73 as of about 2:35 p.m. EST today. The stock is up about 1% over the last month and up 46.5% since the start of the year.
