3 Min Read
(Adds details from lawsuit, background)
By Svea Herbst-Bayliss
BOSTON, Oct 21 (Reuters) - Allergan Inc said on Tuesday it saw no evidence to support claims by hostile suitors Valeant Pharmaceuticals and hedge fund Pershing Square Capital Management that its chief executive officer had spearheaded a campaign to spread misinformation.
"Allergan stands by its statements regarding the unsustainability of Valeant's business, and we welcome the opportunity for a full hearing on Valeant's business model at the appropriate time," the company said in a statement.
Pershing Square, run by billionaire William Ackman, has been working with Valeant for months to craft a deal for the Canadian drugmaker to buy Allergan, which has rejected the overtures and tried to find other potential partners to avoid a deal.
Allergan has also sued Valeant and Pershing Square, saying they broke insider trading rules. It said court papers that Valeant and Pershing Square filed in federal court in Santa Ana, California, late on Monday "try to distract shareholders from the serious insider trading allegations Allergan has raised."
In the heavily redacted court papers, Valeant and Pershing Square say Allergan CEO David Pyott misled shareholders about the departure of Chief Financial Officer Jeff Edwards.
"That and other documents confirm that the pressure to mischaracterize events came from Pyott," the documents said. They went on to say Pyott "falsely stated to the market and Valeant's top investors .... that Valeant's accounting was opaque and problematic, when Allergan's own advisor Goldman Sachs indicated otherwise."
Lawyers for Pershing Square and Valeant said Allergan's board members were intent on preserving their own well-paying jobs "at the expense of the truth, with Allergan engaging in a specific campaign to decrease Valeant's stock price, one of the components of the proposed transaction."
Most Allergan board members earned more than $400,000 in 2013.
The court filing late on Monday further raises the tensions between the two sides in a deal that, if struck, could become the year's biggest.
The information came to light last month when Allergan produced 4,200 pages of documents and lawyers for Ackman and Valeant deposed the company's executives and board members, including Pyott.
Ackman has succeeded in calling for a Dec. 18 special meeting, where he hopes to replace most of Allergan's board with his own slate, which would be ready to discuss a takeover.
Last week Allergan said that Harvard Business Review ranks Pyott as one of the of world's top five CEOs, based on three quantitative metrics, but Ackman, who earned his undergraduate and business degrees from Harvard, said the journal had goofed on the math and that the hedge fund had asked for a correction.
The case is Allergan Inc et al v. Valeant Pharmaceuticals International Inc et al, United States District Court Central District of California Southern Division - Santa Ana No. 14-01214. (Reporting by Svea Herbst-Bayliss; Editing by Franklin Paul and Lisa Von Ahn)