(Reuters) – Billionaire William Ackman’s Pershing Square Capital Management said on Tuesday that it would sue botox-maker Allergan Inc if the company went ahead with a deal to buy drugmaker Salix Pharmaceuticals Ltd.
Allergan is trying to seal a deal with Salix in order to stay independent and fend off a $53 billion hostile offer from Valeant Pharmaceuticals Inc . Valeant’s offer is backed by Pershing Square – Allergan’s largest shareholder with a 9.72 percent stake.
In a letter to Allergan’s board on Tuesday, Ackman said Pershing Square would sue the company for breach of fiduciary duty if it resumed attempts to buy Salix without a shareholder vote.
The activist-investor has also called Allergan’s attempts at acquisitions "desperate".
Allergan said in an emailed statement on Tuesday that its board still believes that Valeant’s bid is "grossly inadequate and substantially undervalues" the company.
Reuters reported on Monday that Allergan had resumed talks to buy Salix.
Allergan’s shares were up 2.5 percent at $170.20 in early trade on the Nasdaq, while Salix’s shares were up about 5 percent at $167.45. Valeant’s U.S.-listed shares were down 0.3 percent at $116.68.
Pershing Square sued Allergan in August, alleging that the drugmaker was delaying a special meeting of shareholders to discuss the Valeant offer in order to buy time to find a target of its own.
The two sides settled that lawsuit last week and agreed to a special shareholder meeting on Dec. 18.
Pershing Square and Valeant might try to remove Allergan board members during the meeting.
Salix is itself in the process of merging with an Irish unit of Switzerland-based Cosmo Pharmaceuticals SpA in a tax-inversion deal.
The company’s top shareholders, however, are threatening to vote against the deal with Cosmo, putting pressure on Salix to consider selling itself instead, Reuters reported last week.
Salix’s potential deal with Cosmo could be further complicated by the Obama administration’s announcement on Monday of new rules to curb "inversion" deals that allow companies to escape high U.S. taxes by reincorporating abroad.
