COLUMN-Allergan's latest tactic to fend off Pershing: Frankel

Tue Oct 7, 2014 7:38pm EDT
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(The opinions expressed here are those of Alison Frankel, a columnist for Reuters.)

By Alison Frankel

NEW YORK (Reuters) - Is there any Allergan shareholder who isn't aware that William Ackman's hedge fund, Pershing Square Capital, and the Canadian pharmaceutical company Valeant slipped through a loophole in the securities laws when they teamed up on a hostile bid for the Botox maker?

Or that Allergan believes the loophole is actually a violation of the law and Pershing is engaged in insider trading?

If so, I'd like to know the name of the remote Pacific atoll where you've apparently been luxuriating without the Internet, newspapers and television for the past few months.

This cleverly lawyered deal has been chronicled (including by me) with the sort of play-by-play analysis that's usually reserved for NFL playoff games or middle-school romances.

Yet according to Allergan's new bid for a preliminary injunction, filed Monday night in federal court in Santa Ana, California, Allergan shareholders have been operating at a critical disadvantage: They haven't fully understood the risk that Pershing and Valeant were breaking the law.

Allergan's lawyers at Latham & Watkins and Wachtell, Lipton, Rosen & Katz argue not only that Pershing shouldn't be permitted to vote its nearly 10 percent stake when Allergan shareholders convene on Dec. 18 to consider the ouster of six Allergan board members, but also that Pershing should also be enjoined from voting the proxies it collects in the formal proxy fight the hedge fund launched on Sept. 29.

Shareholders, according to Allergan, can't make a well-reasoned decision about replacing directors until Pershing discloses its supposed insider trading.   Continued...