Pershing Square Capital Management LP has filed a lawsuit in Delaware court seeking a declaratory judgment to confirm that its recent push for a special meeting of Allergan, Inc. (NYSE:AGN) shareholders won’t trigger Allergan’s recently adopted poison pill.
The lawsuit, unveiled Friday, comes after a request Pershing made earlier this month to Allergan, Inc. (NYSE:AGN). The firm seeks confirmation that the company won’t use its poison pill to impede the calling of a special meeting. Pershing wants to call for a special meeting of Allergan shareholders in an effort to unseat six members of the company’s board.
Allergan’s poison pill
In April, Allergan, Inc. (NYSE:AGN) announced that if any “unapproved investor” acquired at least 10% of its stock, other shareholders will be able to buy shares at a discount. Activist investor Bill Ackman, who teamed up with Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) in an unprecedented move, has disclosed a 9.7% stake in Allergan. By putting the poison pill in place, Allergan aims to keep Ackman from significantly adding to his position.
Earlier this week, Allergan, Inc. (NYSE:AGN) announced that its board unanimously rejected Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX)’s latest offer. The board said the offer still undervalues the company while also creating big risks and new uncertainties for Allergan shareholders.
The revised offer from Valeant Pharmaceuticals Intl Inc (NYSE:VRX) (TSE:VRX) was for a combination of $72 in cash per common share of Allergan plus .83 Valeant common shares per Allergan, Inc. (NYSE:AGN) share. The deal also included a contingent value right in connection with DARPin sales.
The lawsuit was filed in Delaware Court of Chancery. Ackman said: “We regret that we were forced to file this lawsuit. Allergan’s failure to confirm that its poison pill does not apply to the actions taken in furtherance of calling a special meeting is a blatant attempt to frustrate shareholders’ ability to express their views and exercise their rights.”