(Adds Allergan response, Ackman comment on financing markets)
By Rod Nickel
July 17 Allergan Inc, trying to fend off
a hostile takeover bid from Valeant Pharmaceuticals
International Inc, has thrown up obstacles to 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 one, Ackman said. Shareholders must hold their stock
through the date of the special meeting for them to count, he
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 the offer.
An Allergan spokesperson dismissed criticism by Pershing,
which supports the takeover bid.
"Today's presentation by Mr. Ackman is more of the same -
baseless accusations and mischaracterizations designed to
distract stockholders so Valeant can acquire Allergan at the
lowest possible price."
Allergan is "stockholder-friendly" and focused on delivering
value to investors, the spokesperson said.
Ackman said Pershing hoped to gather enough shareholder
support by mid-August 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 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 estimated $222 on Wednesday.
Allergan shares were up 0.7 percent at $166.92 in afternoon
trading in New York, while Valeant had tacked on nealy 4 percent
at C$131.31 in Toronto.
Valeant officials did not respond to a request for comment.
Ackman used much of the nearly three-hour webcast to
criticize Allergan's corporate governance and its business,
including the approaching expiry of patents on some products and
the return on its research and development spending.
He also said the longer Allergan delays negotiating with
Valeant, the greater the risk that a potential deal will fall
apart due to a sudden change in equity or debt markets.
"I would say the financing markets cannot get better than
where they are," Ackman said. "You can't ask for a better market
than this, but that can change overnight."
(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Lisa
Von Ahn and Andre Grenon)