There’s another chapter in Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX)’s quest to take over Allergan, Inc. (NYSE:AGN). A court has blocked Allergan’s attempt to keep Valeant and Pershing Square Capital Management from voting at the company’s special meeting.

However, it seems the court also raised some concerns about the partnership between Valeant and Pershing Square and the purchase of Allergan shares.

Valeant, Pershing Win Partial Victory Over Allergan

Court grants Pershing, Valeant the right to vote

Allergan management had argued that Pershing Square and Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) violated insider trading laws and should not be allowed to vote at the special meeting on Dec. 18. At that meeting, shareholders will have the opportunity to vote out most of Allergan, Inc. (NYSE:AGN)’s current board of directors, if they so desire.

In addition to blocking Pershing Square and Valeant, Allergan had also tried to bar other shareholders approached by Pershing.

“It is in situations like these that courts should be mindful that Congress designed the Williams Act to be neutral and to leave decisions regarding a company’s future and a company’s management in the hands of shareholders, so long as shareholders have adequate information to make those decisions,” Judge Carter stated in his ruling.

Allergan responds to court ruling

The court also ordered additional disclosures by Pershing Square and Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX), and the firms said those disclosures will be promptly made. Unsurprisingly, this is the part of the ruling Allergan, Inc. (NYSE:AGN) focused on in its statement.

According to Allergan’s statement, it raised some “serious questions” about whether Valeant and Pershing violated insider trading rules. Neither Allergan shareholder will be able to vote until they update their disclosures. The Botox maker also said that it will seek an emergency appeal to block Bill Ackman’s firm from voting its shares to unseat most of its board members.

The court called the concerns raised by Allergan, Inc. (NYSE:AGN) “persuasive.” The ruling cited concerns about so-called “warehousing,” which involves someone who’s making a tender offer intentionally leaking information to institutional investors for the purposes of making trades before the information is publicly released.

An Allergan spokesperson said in a statement, “The Allergan Board of Directors is strongly committed to protecting the stockholder franchise and believes it is important that the rights of the Company’s stockholders not be infringed by the actions of one hedge fund that significantly profited (to the detriment of other stockholders and the market) by trading in Allergan securities while in possession of material non-public information regarding Allergan.”

Carter PI Allergan Valeant PSCM by theskeptic21