Pershing Square Releases Letter to Allergan’s Board of Directors

  Pershing Square Releases Letter to Allergan’s Board of Directors

          Pershing Square to Hold Webcast on July 17 at 8:30 am EDT

Business Wire

NEW YORK -- July 16, 2014

Pershing Square Capital Management, L.P. (“Pershing Square”) today announced
it has sent a letter to Allergan, Inc. (“Allergan”)’s Board of Directors. The
text of the letter is set forth at the bottom of this press release.

Pershing Square also announced it will hold a webcast on Thursday, July 17, at
8:30 am EDT to discuss Allergan’s corporate governance and other aspects of
its business and operations. The webcast will include an open Q&A for
investors. Details for the webcast are as follows:

                        Date: Thursday, July 17, 2014
                             Time: 8:30 a.m. EDT
                  Webinar Livestream:

Pershing Square last Friday filed definitive solicitation materials with the
U.S. Securities and Exchange Commission (“SEC”) to seek shareholder support
for a special meeting of Allergan shareholders and is now actively soliciting
shareholder support to call the meeting. At this special meeting, Allergan
shareholders will be able to voice their opinions on a number of critical
matters, including the proposed removal of six incumbent members of the
Allergan board, the proposed appointment of an independent slate of directors
and certain other proposed provisions to improve Allergan’s corporate

Pershing Square Letter to Allergan’s Board:

                               July 16^th, 2014

Mr. David E. I. Pyott
Mr. Michael R. Gallagher
Mr. Russell T. Ray
Dr. Trevor Mervyn Jones
Mr. Louis J. Lavigne
Dr. Deborah Dunsire
Dr. Peter J. McDonnell
Mr. Timothy D. Proctor
Mr. Henri A. Termeer

                          Re: It is Time to Reflect

To the Board of Directors of Allergan:

In my 21-year history as a governance investor, I cannot think of another
example in our portfolio where a board has behaved as poorly as you have in
your response to the Valeant merger proposal. Your scorched earth response to
Valeant is beyond the pale. You have accused Valeant of fraudulent accounting
and of falsifying its reported growth rates and business performance, and you
have done so without factual evidence to prove these assertions. If one
spreads false and misleading information for the purpose of driving down
Valeant’s stock price, that is market manipulation, plain and simple. That a
board of a $50 billion market cap company would engage in such behavior as a
defensive tactic is extraordinary and incredibly inappropriate.

Valeant has offered to acquire Allergan for $72 per share in cash and 0.83
shares of Valeant common stock representing a 50% premium to Allergan’s
unaffected price, a transaction in which Allergan shareholders will own 44% of
the combined company. In addition, Valeant has offered to issue a CVR to share
the value of DARPin with Allergan shareholders. Valeant has raised its bid
twice, lastly in response to feedback we received from what we believe to be a
representative sample of the largest institutional, long-standing shareholders
of Allergan. We remind you that the current value of Valeant’s stock does not
reflect the value ultimately received by Allergan shareholders because
Valeant’s stock currently trades at a substantial discount due to Allergan’s
scorched earth, negative information campaign against Valeant, the uncertainty
of transaction consummation due to Allergan’s defensive tactics, and the
resulting delays in time to closure.

Nearly 90% of Allergan stock has changed hands at prices above $160 per share
since the Valeant bid was made public. We believe that a substantial portion
of these shares have been purchased from long-standing investors of Allergan
that do not believe that the current market prices are reflective of
Allergan’s value as an independent enterprise, and/or have lost confidence
that the board and management will act in shareholders’ interests. These
investors are sending a strong and clear message to the board that it is time
to negotiate a deal with Valeant.

Meanwhile, the board continues to stick its proverbial head in the sand. By
refusing to engage with Valeant, we believe that you have breached your
fiduciary duty of care and ultimately your duties of loyalty and good faith.
Valeant is not offering to buy Allergan for cash, rather the majority of the
consideration is in the form of common stock of the combined enterprise. As a
result, the value of the consideration is contingent on the future value of
the merged company, 44% of which will be owned by Allergan shareholders.

When a stock transaction is proposed between two similarly-sized enterprises
like Valeant and Allergan in which the target shareholders will own a large
percentage of the acquirer, the value of the combined company can only be
determined by a detailed analysis of transaction synergies, strategic overlap,
future business plans, and other factors. This information can only be
obtained by engaging with Valeant. It is difficult to understand how you can
be satisfied that you are exercising due care when you are refusing the
opportunity to review available information that is critical to your decision.
Based on Allergan’s public attacks on Valeant’s business, it is manifest that
you do not have an adequate understanding of Valeant for you to fulfill your
obligation to determine whether the transaction is in the best interest of
Allergan shareholders.

I ask that you consider the below questions in light of your published
statements that the Valeant offer is “grossly inadequate.” If today’s
discounted value of the Valeant bid of $171 per share “grossly undervalues”
Allergan then:

Why did Mr. Pyott sell $31 million dollars of common stock at $123 per share
in February of this year?

Why did other executives sell an additional $57 million of stock at $119
dollars per share in the first quarter of this year?

Why did the compensation committee award millions of dollars of restricted
stock and options to management earlier this year based on management’s
sandbagged earnings targets? We note that just prior to the Valeant offer,
Allergan management had announced an “aspirational” earnings growth rate of
~15%. Two weeks after the Valeant offer, management increased its guidance to
20% compounded earnings growth over the next five years. Remarkably, Mr. Pyott
is now hinting that guidance will be raised yet again on the upcoming earnings

Why is Allergan contemplating taking on billions of dollars of leverage and
initiating a multibillion dollar buyback at a likely substantial premium to
today’s stock price when it was unwilling to repurchase stock less than a year
ago at half of today’s stock price?

Why is the company now considering making a major acquisition? If such a
value-creating transaction were available in the past, why did the company not
act on it then when the market for pharma deals was less heated? Why would
Allergan wait until its negotiating leverage has been impacted by every
seller’s knowledge that management is desperate to do a deal to “defend” the
company from being acquired?

How can the board ignore the fact that Goldman Sachs, Allergan’s financial
advisor, immediately prior to the announcement of the transaction (before it
was required to suspend coverage), had a price target for Valeant of $164 and
had Valeant on its “Conviction Buy List”? At $164 per Valeant share, we note
that the Valeant deal is worth $208 per Allergan share.

How can the board ignore the valuations and target prices that its own
advisers had for Allergan and Valeant before they were hired to “defend” the

In June of last year, Goldman Sachs raised $2.3 billion as Valeant’s sole
underwriter of its equity offering. Why would Goldman Sachs have assumed sole
underwriter liability in doing so if Valeant’s financial statements are
fraudulent as you have suggested?

We note that in Allergan’s 14D-9, the inadequacy opinions Allergan obtained
from the company’s bankers expressly state: "We do not express any view on,
and this Opinion does not address, the fairness, from a financial point of
view"... of the Valeant offer. Why didn’t the board insist that the company’s
financial advisors complete a fairness analysis of the Valeant proposal before
determining that it was inadequate?

How can the board have adequately informed itself of fairness of the Valeant
proposal if it did not receive a fairness analysis from its own advisors?

Members of the board of directors of a Delaware corporation faced with a
takeover bid are required to inform themselves of all material information
about a transaction, and then act with care in evaluating it. By failing to
authorize your advisors to meet with Valeant to address any of the board’s
stated concerns about its organic growth, accounting, business sustainability,
or synergies, the board and its advisors have failed to do a reasonable
investigation of the Valeant transaction. As a result, we believe you are in
breach of your fiduciary duties, and have otherwise not acted in good faith.

We would have expected more from you based on your personal career track
records up until this time, and what we have heard about some of you from
individuals we know in common. I had hoped that your initial approach to this
transaction was an ill-advised negotiating strategy, but the passage of time
and your continued misinformation campaign about Valeant have caused us to
conclude that you are no longer fit to serve the interests of shareholders. As
a result, we have recruited a group of extremely talented executives and
experienced public company directors who understand their fiduciary duties and
have a track record of acting in the best interest of shareholders and the
companies they have managed as CEOs and as members of their boards of

We encourage you to review the backgrounds of the individuals on our slate who
have agreed to serve on Allergan shareholders’ behalf. They will bring to the
board room superb track records in creating and maximizing shareholder value
coupled with excellent transaction skills, accounting expertise, broad
business experience and healthcare and pharmaceutical industry domain
expertise. We would be surprised if some of you do not know, or know of, the
individuals who have agreed to serve. Ask yourself why a group of high quality
individuals, who certainly don’t need the directors’ fees, have agreed to
replace you at the shareholders’ behest on Allergan’s board.

The bottom line is this: it is time for you to look at yourself in the mirror
and ask yourself whether your behavior as a director of Allergan is
appropriate and consistent with your long-term personal reputation and the way
you would like to be perceived and judged by institutional and retail
investors, the general public, and members of your community and immediate
family. Ask yourself whether your approach to this transaction has been
business-like and professional, whether you have been adequately informed by
management and your advisors about Valeant, and whether you have fulfilled
your duties of care, loyalty and good faith as a director. Ask yourself
whether if you had half your net worth invested in Allergan stock (and were
not otherwise conflicted by being a member of management) the approach you
have taken is consistent with maximizing value for shareholders?

We believe the vast majority of Allergan’s shareholders are extremely
concerned that, to date, you have not fulfilled your fiduciary duties. Perhaps
more significantly for you personally, you have harmed your reputations as
corporate citizens. We remind you that it takes a lifetime to build a
reputation and only a few minutes to destroy it.

Rather than attempt to delay the inevitable and further damage your
reputations, we ask that you stop this nonsense, and authorize prompt
negotiations with Valeant. If, as part of your due diligence on Valeant, you
and/or advisors discover the malfeasance that you have suggested exists, then
as Allergan’s largest shareholder with a $5 billion investment we would of
course strongly oppose a Valeant transaction.

If, however, your due diligence determines, as we (after the completion of our
own detailed due diligence) and other major Allergan shareholders who own
stock in both companies have concluded, that Valeant has built a well-managed,
decentralized, disciplined specialty pharmaceutical manager, operator, and
acquirer which offers tremendous strategic overlap and synergies with
Allergan, then first apologize, and then negotiate the best deal you can for
Allergan shareholders. Valeant has publicly stated that it is open to further
negotiations if the board engages promptly in good faith negotiations.

We are now working to obtain the consents to call a special meeting, and upon
their receipt, we will ask the board to call the meeting. While under the
company’s highly restrictive and cumbersome special meeting mechanics, you
have the ability to delay the meeting for up to 120 days, we on behalf of
Allergan’s other shareholders ask that you do not delay the inevitable any
further. What legitimate board of directors attempts to silence or otherwise
delay hearing what its own shareholders have to say? Shareholders are looking
forward to expressing their views.



William A. Ackman
Chief Executive Officer

About Pershing Square

Pershing Square, based in New York City, is a SEC-registered investment
advisor to private investment funds. Pershing Square manages funds that are in
the business of trading — buying and selling — securities and other financial
instruments. A fund managed by Pershing Square is Allergan’s largest
shareholder with an approximately 9.7% ownership stake.


This communication does not constitute an offer to buy or solicitation of an
offer to sell any securities. This communication relates to Pershing Square’s
solicitation of written requests to call a special meeting of shareholders of
Allergan in connection with the proposal which Valeant has made for a business
combination transaction with Allergan. In furtherance of this proposal,
Pershing Square has filed a definitive solicitation statement with the
Securities and Exchange Commission (the “SEC”) on July 11, 2014 (the
“solicitation statement”), Valeant has filed a registration statement on Form
S-4 (the “Form S-4”) and a tender offer statement on Schedule TO (including
the offer to exchange, the letter of election and transmittal and other
related offer materials) with the SEC on June 18, 2014 (together with the Form
S-4, the “Schedule TO”), and a preliminary proxy statement on June 24, 2014
with respect to a meeting of Valeant shareholders, and Valeant and Pershing
Square (and, if a negotiated transaction is agreed, Allergan) may file one or
more other solicitation statements, proxy statements, registration statements,
tender or exchange offer documents or other documents with the SEC. This
communication is not a substitute for the solicitation statement, the Schedule
TO or any other solicitation statement, proxy statement, registration
statement, prospectus, tender or exchange offer document or other document
Valeant, Pershing Square and/or Allergan may file with the SEC in connection
solicitation statement is currently being mailed to stockholders of Allergan.
Any other definitive solicitation statement or proxy statement or definitive
tender or exchange offer documents (if and when available) will be mailed to
stockholders of Allergan and/or Valeant, as applicable. Investors and security
holders may obtain free copies of the solicitation statement and the Schedule
TO, and will be able to obtain free copies of these other documents (if and
when available) and other documents filed with the SEC by Valeant and/or
Pershing Square, through the web site maintained by the SEC at

Information regarding the names and interests in Allergan and Valeant of
Pershing Square and persons related to Pershing Square who may be deemed
participants in any solicitation of Allergan or Valeant shareholders in
respect of a Valeant proposal for a business combination with Allergan is
available in the solicitation statement. Information regarding the names and
interests in Allergan and Valeant of Valeant and persons related to Valeant
who may be deemed participants in any solicitation of Allergan or Valeant
shareholders in respect of a Valeant proposal for a business combination with
Allergan is available in the additional definitive proxy soliciting materials
in respect of Allergan filed with the SEC by Valeant on April 21, 2014, and
May 28, 2014 and June 24, 2014. The additional definitive proxy soliciting
material referred to in this paragraph and the solicitation statement can be
obtained free of charge from the sources indicated.


Shareholder Contact:
D.F. King & Co., Inc.
Edward McCarthy/Richard Grubaugh/Melinda Hanzel, 212-269-5550
Media Contacts:
Rubenstein Associates:
Carolyn Sargent/Steve Murray/Fran McGill, 212-843-8000
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