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Allergan Being ’Obstructive’ in Deal Defense, Firm Says

Allergan Inc. shareholders should support a special meeting, an investor advisory firm said today, to help Valeant Pharmaceuticals International Inc.’s efforts to take over the maker of the anti-wrinkle drug Botox.

Allergan’s “cumbersome” set of bylaws “casts a rather dubious light on the seriousness of the board’s desire to be responsive to investors,” said Glass Lewis & Co in a report to clients today. The company’s recommendations on proxy fights are often followed by investors.

“This obstructive process echoes a trend of recalcitrant adherence to progressive corporate governance standards at Allergan,” Glass Lewis said.

The investment advisory firm is weighing in on the increasingly acrimonious takeover attempt by Laval, Quebec-based Valeant, which is backed by activist investor Bill Ackman. Ackman’s hedge fund, Pershing Square Capital Management LP, amassed a 9.7 percent stake in Allergan to help push a deal to completion and has called for a meeting of shareholders to remove most of Allergan’s board and add six new directors.

The proxy advisory firm Institutional Shareholder Services Inc., or ISS, is also expected to release its own set of recommendations on the special meeting.

“Glass Lewis’s recommendation does not change the fact that Valeant’s offer is grossly inadequate, substantially undervalues Allergan, creates significant risks and uncertainties for Allergan stockholders and is not in the best interests of the company and its stockholders,” Scott Bisang, a representative for Allergan at Joele Frank, Wilkinson Brimmer Katcher, said in an e-mail today.

Allergan Suit

Allergan sued Valeant on Aug. 1, claiming the drugmaker colluded with Pershing Square to profit from trades ahead of the bid’s announcement, using its insider knowledge of the impending offer. Valeant and Pershing Square called the lawsuit a “desperate attempt to delay or avoid” the special shareholder meeting requested by Ackman.

Irvine, California-based Allergan has repeatedly rejected Valeant’s acquisition offers, including the latest bid of $72 a share in cash and 0.83 of a Valeant share for each Allergan share. David Pyott, Allergan’s CEO, announced a restructuring including cutting 1,500 jobs as he attempts to persuade shareholders to keep the company independent.

Allergan shares fell 3.2 percent to close at $158.54 in New York. Valeant shares fell 5.3 percent to close at $110.66.

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