(Adds details from letter, background to request)
By Svea Herbst-Bayliss
Aug 4 (Reuters) - Proxy advisory firm Glass Lewis on Monday suggested that Allergan Inc shareholders join hedge fund manager William Ackman in calling for a special shareholder meeting.
In a report issued to clients, the firm said that shareholders should fill out the paperwork required by Botox maker Allergan for anyone who would like to call for a special shareholder meeting.
“We are inclined to suggest shareholders would be best served setting aside the aforementioned risks in favor of the Pershing Square Written Request effort,” Glass Lewis said.
Ackman, working with Valeant Pharmaceuticals Inc, has tried for months to broker a deal where Valeant would buy Allergan for $51 billion, but so far Allergan has steadfastly refused.
As a next step, Ackman whose $15 billion Pershing Square Capital Management owns 9.7 percent of Allergan, has laid the groundwork to call for a special meeting where he hopes to replace the majority of the board with new directors who will be more receptive to the takeover bid.
The report could be seen as a win for Ackman in the increasingly bitter battle for Botox maker Allergan’s future.
Allergan requires a shareholder to have the support of 25 percent of all shares in order to call a special meeting and its bylaws require the shareholders who want to make such a request to do it in writing.
Glass Lewis took care to note that shareholders would not explicitly throw their weight behind a takeover by participating in the process to let a special meeting be called.
“We note the current process - as presently framed - does not represent a vote on the merits of any prospective combination transaction or any change to the sitting board; rather investors would only be participating in a process intended to afford them the opportunity to directly express their opinions - positive or negative - on those issues,” Glass Lewis wrote in its nine-page report seen by Reuters.
“Thus, viewed collectively, we believe the foregoing factors serve as adequate cause for shareholders to participate in Pershing Square’s Written Request solicitation,” the report said.
Proxy advisory firms’ opinions often help shape shareholder views on certain actions. Large investors, including mutual funds, are looking for guidance on how to act in this bitter corporate fight.
Institutional Shareholder Services, another proxy advisory firm, is expected to issue its report in the next few days.
The opinion comes only a few days after Allergan sued Ackman and Valeant accusing them of have broken insider trading regulations by having worked out the possible details for a takeover bid as the $15 billion hedge fund was building its stake in Allergan. (Reporting by Svea Herbst-Bayliss; Editing by Lisa Shumaker)