Pershing Seeks Shuffling Allergan Board to Push Valeant Deal

Jun 02, 2014 11:54 am ET

(Updates with comments from Allergan in fifth paragraph.)

June 2 (Bloomberg) -- Pershing Square Capital Management LP, Allergan Inc.’s biggest investor, is calling for a special shareholder meeting to remove most of the drugmaker’s board in an effort to push forward a proposed acquisition by Valeant Pharmaceuticals International Inc.

A deal could be signed within a week if Allergan’s board decides to negotiate, Pershing Square’s Chief Executive Officer Bill Ackman said today in a conference call. Under the latest offer, Allergan shareholders would get $72 a share in cash, up from $58.30 proposed May 28 when Valeant first raised the bid, and 0.83 of a Valeant share, the Laval, Quebec-based company said in a May 30 statement.

Ackman’s hedge fund, which has a 9.7 percent stake in Botox-maker Allergan, filed a preliminary proxy with the Securities and Exchange Commission today to start the process for the shareholder meeting, and Valeant is taking steps to begin an exchange offer. The company has raised its bid twice for Irvine, California-based Allergan. The cash-and-stock portion of the bid now values Allergan at about $54.2 billion.

If Allergan’s management and board of directors choose not to discuss the deal, “a new board, appointed by shareholders, will negotiate a transaction,” Ackman said.

Allergan urged shareholders in a statement today to take no action, including returning any proxy cards to Pershing Square and Valeant as the companies would not be able to solicit proxies without providing definitive materials. Allergan said it would review and consider the revised bid.

Pushing Deal

Pershing plans to solicit for the special meeting starting June 30, expecting shareholders to consider the proxy for the meeting as early as August 7. Allergan would be able to delay the meeting until November.

Pershing would continue to forgo the cash portion of the offer, sweetening the incentive for other shareholders to accelerate closing the deal, Ackman said. He met on May 29 with six out of 10 of Allergan’s largest shareholders, who “expressed disappointment about how Allergan has managed the transaction and the proposal,” Ackman said.

“We believe that speed in concluding a transaction is in the best interest of both shareholders,” said Michael Pearson, Valeant chief executive officer, on the call. “We will be patient, we will get this deal done.”