(Adds shareholder comment)
By Rod Nickel
July 16 Activist investor Bill Ackman urged
Botox maker Allergan Inc to negotiate a possible
takeover by Valeant Pharmaceuticals Inc and not delay a
special shareholder meeting that could overturn most of
Ackman's Pershing Square Capital Management hedge fund,
Allergan's largest shareholder with a 9.7 percent stake, is
attempting to gain support of shareholders owning 25 percent of
Allergan to call a special meeting, during which it would seek
to remove six directors.
Allergan can delay the meeting until as late as November.
"We, on behalf of Allergan's other shareholders, ask that
you do not delay the inevitable any further," Ackman wrote in a
letter to Allergan's board, released on Wednesday. "What
legitimate board of directors attempts to silence or otherwise
delay hearing what its own shareholders have to say?"
Ackman described Allergan's criticism of Valeant as a
"scorched earth response" and said spreading false information
to drive down Valeant's stock would be market manipulation.
Allergan, known for its Botox anti-wrinkle injections, said
that Ackman's economic interests were aligned with Valeant's and
he was trying to distract Allergan shareholders from the fact
that Valeant's offer is too low.
"Pershing Square's letter to the Allergan Board is not based
on facts, and is rooted purely in self-interest and innuendo,"
said an Allergan spokesperson.
Laval, Quebec-based Valeant, made an unsolicited cash and
stock bid for California-based Allergan in April and has since
raised its $51-billion offer.
"I think the path forward for Allergan is to merge with
Valeant. That is the strategy that would create the greatest
shareholder value, according to our analysis," said Kris Jenner,
co-founder of Baltimore-based hedge fund Rock Springs Capital
which holds shares in both Valeant and Allergan.
"This is not a popularity contest or a question of which CEO
or business model we think is preferable. It's a quantitative
argument about whether Allergan as a standalone company
represents the greater value over the next two to three years."
Allergan shares edged up 0.4 percent to $164.97 in afternoon
trading in New York, while Valeant stock added 1.2 percent to
(Reporting by Rod Nickel in Winnipeg, Manitoba and Ransdell
Pierson and Olivia Oran in New York; Editing by Bernadette Baum)