US district court permits Pershing Square to vote at Allergan special shareholder meeting

A US district court on Tuesday ruled that Pershing Square Capital Management can vote its 9.7-percent stake in Allergan in a special shareholder meeting on December 18. However, District Court judge David Carter said Allergan has raised "serious questions" concerning whether Valeant Pharmaceutical and Pershing Square's joint takeover bid for Allergan violated laws prohibiting insider trading.

Specifically, the judge ordered Pershing Square and Valeant to provide additional disclosures regarding their joint bid. Allergan noted that the court ruled that Valeant and Pershing Square must disclose that their agreement included a clause that the companies agreed to be called "co-bidders" if the acquisition of Allergan proceeded as a tender offer.

Commenting on the news, Valeant CEO J. Michael Person remarked "today's ruling is a victory for all Allergan shareholders as it puts the choice of Allergan's future in the hands of its owners," adding "we look forward to the December 18 special meeting. The Canadian drugmaker, which was previously rumoured to be considering increasing its offer for Allergan by $15 per share, stated that the requested disclosures will be promptly made.

The ruling came as part of a lawsuit in which Allergan has accused Valeant and Pershing Square of engaging in insider trading and asked the court to bar Pershing Square from voting its stake in the shareholder meeting.

Meanwhile, Allergan said it was "pleased that the court ruled there are serious questions as to the merits of Allergan's insider trading case against Pershing Square and Valeant and ordered them to revise their disclosures." The US drugmaker, which unanimously rejected Valeant and Pershing Square's offer as "grossly inadequate", stated that it would file an emergency appeal of the ruling.

Earlier this week, Allergan confirmed that a second bidder had approached the drugmaker regarding a merger, with sources suggesting that the second bidder was Actavis. People with knowledge of the matter disclosed in September that Allergan had rejected an acquisition offer from Actavis (for related analysis, see ViewPoints: Will Actavis emerge as Allergan's white knight?).

For further analysis, read ViewPoints: Valeant's latest overtures are rebuffed by Allergan.

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