(Adds details from letter, background to request)
By Svea Herbst-Bayliss
Aug 4 Proxy advisory firm Glass Lewis on Monday
suggested that Allergan Inc shareholders join hedge fund
manager William Ackman in calling for a special shareholder
In a report issued to clients, the firm said that
shareholders should fill out the paperwork required by Botox
maker Allergan for anyone who would like to call for a special
"We are inclined to suggest shareholders would be best
served setting aside the aforementioned risks in favor of the
Pershing Square Written Request effort," Glass Lewis said.
Ackman, working with Valeant Pharmaceuticals Inc,
has tried for months to broker a deal where Valeant would buy
Allergan for $51 billion, but so far Allergan has steadfastly
As a next step, Ackman whose $15 billion Pershing Square
Capital Management owns 9.7 percent of Allergan, has laid the
groundwork to call for a special meeting where he hopes to
replace the majority of the board with new directors who will be
more receptive to the takeover bid.
The report could be seen as a win for Ackman in the
increasingly bitter battle for Botox maker Allergan's future.
Allergan requires a shareholder to have the support of 25
percent of all shares in order to call a special meeting and its
bylaws require the shareholders who want to make such a request
to do it in writing.
Glass Lewis took care to note that shareholders would not
explicitly throw their weight behind a takeover by participating
in the process to let a special meeting be called.
"We note the current process - as presently framed - does
not represent a vote on the merits of any prospective
combination transaction or any change to the sitting board;
rather investors would only be participating in a process
intended to afford them the opportunity to directly express
their opinions - positive or negative - on those issues," Glass
Lewis wrote in its nine-page report seen by Reuters.
"Thus, viewed collectively, we believe the foregoing factors
serve as adequate cause for shareholders to participate in
Pershing Square's Written Request solicitation," the report
Proxy advisory firms' opinions often help shape shareholder
views on certain actions. Large investors, including mutual
funds, are looking for guidance on how to act in this bitter
Institutional Shareholder Services, another proxy advisory
firm, is expected to issue its report in the next few days.
The opinion comes only a few days after Allergan sued Ackman
and Valeant accusing them of have broken insider trading
regulations by having worked out the possible details for a
takeover bid as the $15 billion hedge fund was building its
stake in Allergan.
(Reporting by Svea Herbst-Bayliss; Editing by Lisa Shumaker)