UPDATE 3-Ackman: Allergan CEO has conflict of interest on takeover offer

Mon May 19, 2014 6:20pm EDT
 
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(Adds Allergan board letter to Ackman, closing share prices)

By Caroline Humer

May 19 (Reuters) - Activist investor William Ackman said on Monday that Allergan Inc's chief executive has a "disabling" conflict of interest because a takeover of his company by Valeant Pharmaceuticals International Inc would likely mean the loss of his job.

Ackman and Montreal-based Valeant launched a $47 billion takeover of the company on April 22, but Allergan rejected the offer on May 12 and has not budged since. Allergan Chief Executive David Pyott is urging shareholders to let the company stand alone.

Valeant, however, said last week it intended to sweeten its offer and would discuss the matter in a May 28 webcast.

Ackman, who controls a nearly 10 percent stake in Allergan as the head of Pershing Square Capital Management, criticized Allergan's position in a May 19 letter to its lead director, Michael Gallagher.

The activist investor said Allergan's board of directors needed to create a subcommittee to communicate directly with shareholders, and he complained that his attempts to speak to the company's top director without management present were rejected.

"The board's apparent unwillingness to speak or meet with us and your unwillingness to speak with the company's largest shareholder without Mr. Pyott present are both material failures of Allergan's corporate governance at a critical time for Allergan and its shareholders," he said in the letter.

"CEO David Pyott has a disabling conflict of interest that arises from the fact that he will lose his leadership role at the company and likely his job as a result of the transaction," Ackman said in the letter.   Continued...