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Matt Levine

Allergan Doesn't Want to Sell to a Bunch of Insider Traders

You can't insider trade ahead of a tender offer. You can insider trade ahead of a merger. Just go nuts, it's fine. (Please don't go nuts, it's not fine.)

Valeant Pharmaceuticals' fight to take over Allergan, assisted by Bill Ackman's Pershing Square Capital, is among the scorchiest of scorched-earth takeover battles. Today Allergan upped the entertainment factor by suing Valeant and Pershing Square for insider trading. The lawsuit is very clever and great fun, if you're into this sort of thing. In particular, don't miss paragraph 124, in which Allergan says that Valeant "Contacted Allergan sales representatives and welcomed them to Valeant," "Visited Allergan customers, announcing that they were Allergan’s new sales representatives" and "Offered rebates on both Allergan and Valeant purchases," all of which is at the very least incredibly rude, though its connection to insider trading is at best unclear.

Valeant's and Pershing's response is also pretty clever. They point to a memo from Allergan's own lawyers saying that what Valeant and Pershing did is legal and that the Securities and Exchange Commission should change the rules to make it illegal. Which somewhat undercuts Allergan's current argument that it was actually illegal all along. Valeant and Pershing also point out -- what is probably true -- that the main purpose of the lawsuit is to delay their efforts to throw out Allergan's board and buy the company.