An insider trading lawsuit brought by Allergan (NYSE:AGN) won’t delay a shareholder meeting sought by Valeant Pharmaceuticals (NYSE:VRX, TSE:VRX) and William Ackman’s Pershing Square Capital Management hedge fund for a vote on their $53 billion hostile takeover bid, a federal judge ruled yesterday.
Allergan’s bylaws require 25% of its shareholders to approve a special meeting; Valeant and Pershing Square claim they’ve gathered the requisite number of votes to call the meeting. But Allergan’s lawsuit, invoking another bylaw barring a meeting if federal securities laws were broken, alleges that Valeant and Pershing shared insider information when they worked up their bid.
Allergan asked Judge David Carter of the U.S. District Court for Central California to fast-track the lawsuit so that its board can make an informed decision on whether to call the special meeting, according to court documents. Yesterday Carter found neither party’s argument "entirely persuasive."
"Complaints take time to investigate and develop; filing a complex case within a few months of discovering a harm does not necessarily mean that a matter is not urgent, especially when there appear to be new developments every few days in this live battle for corporate control," Carter wrote. "On the other hand, although potentially imminent, neither the formal request for a special meeting nor the actual shareholder meeting has happened yet. It is also not clear that Allergan’s bylaws require Allergan’s directors to wait for the court to resolve the claims before they can act.
"The court appreciates the seriousness of plaintiffs’ federal securities laws claims. However, the court does not see sufficient justification at this time for accelerating plaintiffs’ case over all the others waiting in the docket," the judge added.
The decision will today prompt Valeant and Pershing Square, with more than 30% of shareholders in line, to ask Allergan to call the special meeting, according to a CNBC report citing "sources familiar with the situation."