Paulson is expected to support Valeant Pharmaceuticals‘ unsolicited and unrequited acquisition attempt, helping to add weight to Valeant’s efforts to conduct a shareholder meeting outside of Allergan’s control. It’s not clear how many shares Paulson acquired, but the company is now a top-15 owner in the company, Reuters reported.
Valeant already has the support of another big investor in Pershing Square Capital Management’s Bill Ackman, who has played a big role in pursuing a hostile takeover.
Allergan has largely refused to negotiate with the activist investors, but the company announced today that it came to an agreement, of sorts, with Pershing over a lawsuit filed against the company. Ackman and Pershing had sought a court order ensuring that Allergan won’t enact it’s "poison pill" should Valeant host a shareholder meeting to discuss a buyout.
Allergan’s board adopted the poison pill strategy in April in order to insulate the company from Valeant’s 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. Pershing filed the lawsuit, 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 wanted to see the matter made certain in court.
In a statement issued today, an Allergan spokesperson said that the company had come to an agreement with Pershing that will take the matter out of court.
"Allergan is pleased to announce that Pershing Square has entered into a stipulation with Allergan agreeing to dismiss the litigation filed by Pershing Square in Delaware concerning Allergan’s rights agreement and the ability of Allergan’s stockholders to call a special meeting," an Allergan spokesperson said. "The rights agreement was drafted in a manner to allow Allergan stockholders to seek to call a special meeting, and the stipulation simply makes it clear how the bylaws and the rights agreement work together."