A federal judge in California on Thursday denied a request by Allergan Inc to expedite its civil suit claiming that Valeant Pharmaceuticals International Inc and Pershing Square Capital Management engaged in insider trading ahead of their bid to buy Allergan.
Judge David Carter said the U.S. District Court for the Central District of California "would be reluctant to create a precedent that allows corporations to demand at will the immediate attention and input of the federal courts in order to resolve intra-corporate disputes that might be better left to the dynamic free market or to the state court."
Valeant and Pershing Square made an offer for Botox maker Allergan in April, which the company has rejected. Valeant and Pershing Square have since proceeded to a hostile tender offer and are seeking to call a special shareholders meeting.
Allergan has fought the takeover attempt and on Aug. 1 filed a civil insider trading lawsuit against the companies, saying that the unusual partnership between them violated securities regulations.
William Ackman, the activist investor who runs Pershing Square, began acquiring a stake in Allergan in February in partnership with Valeant after the two had begun discussing making a bid for the company. He disclosed the nearly 10 percent stake the day before they made the offer.
Ackman and Valeant have denied that they broke insider trading laws and have said the suit itself is an attempt to delay the meeting of shareholders. Ackman and Valeant must gather the support of at least 25 percent of shareholders in order to call the meeting for investors to vote on new board members and on Allergan opening merger discussions.
"We are pleased that this attempt by Allergan in the California litigation to delay the special meeting was not successful," Valeant said in statement on Thursday.
Allergan, in a separate statement, said it intends to proceed along the path outlined by the court for a quick resolution once Pershing Square delivers requests for the special meeting.
(Reporting by Caroline Humer and Deena Beasley; Editing by Leslie Adler)