(Adds Allergan, Valeant statements, share prices)
June 27 (Reuters) - Pershing Square Capital Management, led by activist investor William Ackman, and Allergan Inc have agreed that calling a special meeting in an effort to elect new board members will not trigger Allergan's so-called "poison pill" measure, settling a lawsuit, the companies said on Friday.
Pershing Square and Valeant Pharmaceuticals International Inc are pursuing Allergan in a $53 billion hostile takeover bid. Pershing Square has nearly a 10 percent stake in Allergan and if its stake passes 10 percent, Allergan's shareholder rights plan goes into effect and dilutes existing shareholders.
Pershing Square said in a statement that the agreement will allow it to begin soliciting proxies "soon". Valeant issued a statement saying that it was pleased the litigation was resolved and would be "moving forward with our exchange offer."
Pershing Square had filed suit in Delaware earlier this month seeking confirmation that soliciting proxies to call a meeting and replace board members would not trigger the pill. Allergan requires 25 percent of shareholders to call a special meeting.
"The rights agreement was drafted in a manner to allow Allergan stockholders to seek to call a special meeting, and the stipulation simply makes it clear how the bylaws and the rights agreement work together," Allergan spokeswoman Bonnie Jacobs said in an e-mailed statement.
Allergan shares were up $1.43, or 0.8 percent, at $171.98 on the New York Stock Exchange. Valeant shares trading on the NYSE were up $1.63, or 1.3 percent, at $128.13. (Reporting by Caroline Humer and Bill Berkrot; Editing by Marguerita Choy)