July 17 Allergan Inc, trying to fend off a hostile takeover bid from Valeant Pharmaceuticals International Inc, has stacked the odds against a special shareholders meeting, its biggest investor said on Thursday.
Pershing Square Capital Management, which is led by Bill Ackman, is attempting to muster at least 25 percent support of Allergan shares to hold a special meeting that could replace most of the Botox anti-wrinkle injection maker's board, which has refused to negotiate with Valeant.
In a webcast for investors, Ackman said Allergan's rules for special meetings were designed to stop them from occurring.
The company limits special meetings to a small window during a given year and requires a high percentage of stockholders to call for one, Ackman said. Shareholders must hold their stock through the date of the special meeting for them to count, he added.
The rules are "the most onerous special meeting provisions of any public company in the United States," Ackman said.
Laval, Quebec-based Valeant made an unsolicited cash-and-stock bid in April for Allergan and has since raised its offer, which is currently worth about $51 billion. Allergan has rejected it.
Ackman said Pershing expected to gather enough shareholder support to call a special meeting, but probably needed as much as 40 percent for a "big cushion" to offset possible stock sales before the meeting occurs. He said the hedge fund had met on Wednesday with shareholder advisory firm Institutional Shareholder Services, which could make a recommendation on Valeant's offer in early August.
Ackman estimated that a merged Valeant and Allergan would trade at $223 per share, slightly higher than the view of fellow activist investor John Paulson, who on Wednesday estimated it at $222.
Allergan shares rose 0.5 percent to $166.50 in morning trading in New York, while Valeant tacked on 0.8 percent to C$131.76 in Toronto.
Allergan and Valeant officials did not immediately respond to requests for comment. (Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Lisa Von Ahn)