On 15 Septber, Allergan announced that it had agreed to hold the special meeting on its originally scheduled date of 18 Decber. In return, its hostile suitors have dropped their pending lawsuit, which was meant to speed up the meeting and thwart any defensive M&A attpts by the Botox and ophthalmic-products manufacturer and distributor.
At the meeting, Pershing Square chief Mr Bill Ackman hopes to overturn Allergan’s board and replace the majority of its directors with a new, deal-friendlier slate.
Squabbling over the meeting date spurred lawsuits on both sides. Allergan, which has repeatedly termed Valeant’s bid “grossly inadequate”, has until recently done what it could to block the meeting. In August, it sued the Valeant-Ackman team, accusing the duo of insider trading; while Allergan will continue to pursue that litigation, it will stop trying to delay or cancel the meeting.
Now, with the date of the meeting finally set, both sides will gear up for the shareholder vote that could seal their fates. Valeant chief executive officer Mr Michael Pearson, for one, says he’s confident his company will prevail, noting in June that “both sides know how this will come out”.
But according to analysts, Allergan still has time to use some M&A of its own to keep shareholders loyal. Completing a deal -especially one of the tax-inversion variety – could make Allergan too big for Valeant to swallow and potentially negate the low tax rate Valeant has put forth for a combined company.
It’s been five months since activist investor Mr Ackman and Valeant teamed up to make their first play for Allergan. After nearly half a year of lawsuits, trading barbs and vying for investor favor, Mr Ackman now says it’s time for the Allergan’s board to “wake up”.
In a letter of 10 Septber, Mr Ackman urged Allergan’s directors to listen to what Valeant is putting on the table and assured th that they could still “rescue” their reputations by taking over leadership from chief executive officer Mr David Pyott.
“Your actions have wasted corporate resources, delayed enormous potential value creation for shareholders, and are professionally and personally barrassing for you,” Mr Ackman said in his letter, calling Allergan’s battle for independence “the most shareholder-unfriendly, hostile defence process perhaps in the history of corporate America”.
The directors’ jobs could go the way of their reputations, in Mr Ackman’s eyes.
As part of the duo’s hostile takeover attpt, Mr Ackman drafted a slate of deal-friendly directors back in July that he hopes to have installed at a special shareholder meeting in Decber.
Some analysts say he has a decent chance as Valeant and Ackman have a 50-60 per cent chance of winning enough support to replace the majority of the board despite the fact that only 33.8% of shareholders voted to call the special meeting itself.
