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Allergan Poison Pill Won’t Be Triggered by Pershing Call

William Ackman
William Ackman, founder and chief executive officer of Pershing Square Capital Management LP. Photographer: Scott Eells/Bloomberg

Allergan Inc. agreed with Pershing Square Capital Management LP that a call for a special shareholder meeting to replace part of the drugmaker’s board won’t trigger a “poison pill” takeover defense.

Pershing Square, the hedge fund run by investor Bill Ackman, brought the lawsuit as part of its plan with Valeant Pharmaceuticals International Inc. to take over Irvine, California-based Allergan, the maker of the Botox wrinkle treatment. Allergan has rejected Valeant’s $54.2 billion offer as inadequate.

Allergan is “pleased that it was able to address the rights of all stockholders without the need of guidance from the Delaware Court,” it said today in an e-mailed statement.

The settlement of the Delaware Chancery Court lawsuit puts Valeant “another step closer in its pursuit of Allergan,” Alex Arfaei, an analyst with BMO Capital Markets Corp., said in a note to clients. To call the meeting, Pershing Square, Valeant and other backers of a takeover need support from 25 percent of Allergan shareholders, Arfaei said. He estimates they are about halfway there.

Valeant, based in Laval, Quebec, twice raised its bid to buy Allergan as part of its strategy to become one of the world’s five biggest drugmakers.

“We are pleased that further court action is not necessary to enable us to proceed with calling a special meeting of Allergan shareholders,” Ackman said today in a statement.

Ackman’s hedge fund owns 9.7 percent of Irvine, California-based Allergan in a joint venture with Valeant called PS Fund 1 LLC.

Allergan’s anti-takeover provision allows shareholders to buy large amounts of stock at a discount if anyone obtains 10 percent of the company, making a hostile takeover prohibitively expensive.

The case is PS Fund 1 LLC v. Allergan, CA9760, Delaware Chancery Court (Wilmington).

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