(Reuters) – Billionaire William Ackman has signed up Allergan (AGN.N) investors who combined own at least 35 percent of the company to call a special shareholder meeting, according to people familiar with the matter, giving the hedge fund manager a victory in his fight to acquire the Botox maker.
Ackman, whose Pershing Square Capital Management is Allergan’s largest shareholder with a 9.7 percent stake, has teamed up with Canada’s Valeant Pharmaceuticals International Inc (VRX.TO) to pursue a hostile takeover bid for Allergan.
Ackman and other Allergan shareholders who own a combined 31 percent already asked the company last month to call a special meeting, at which he and Valeant hope to elect new board members and open discussions on a deal.
But crossing the 35 percent mark would mark an important step because Allergan is trying to prevent Ackman from voting his nearly 10 percent stake, alleging that the investor improperly built up his holding as he prepared to make a bid with Valeant.
Even in the unlikely event Ackman’s votes are not counted, having 35 percent of investors consenting would satisfy Allergan’s by-laws that at least one quarter of its shareholders request a special meeting.
Pershing expects to deliver requests from additional shareholders for a special meeting as soon as Thursday, putting the number at 35 percent, one of the people added.
All the people asked not to be named because the matter is not public. Representatives for Pershing Square declined to comment and Valeant could not be reached immediately for comment.
Since Valeant and Pershing Square offered to buy Allergan on April 22, Allergan has consistently rejected the offer, saying it undervalues the company. Allergan also has announced a series of cost cuts and said it was looking for acquisitions as it seeks to persuade shareholders they are better off if it stands alone.
Allergan set a Dec. 18 date for a special meeting following shareholder requests, but Ackman wants to expedite it to mid-November, saying that Allergan is trying to give itself time to find an alternative deal.
Allergan Chief Executive David Pyott has said that he is looking at the potential of making a big acquisition, making the company a subject of frenzied merger speculation in recent weeks involving several companies, including Salix Pharmaceuticals Ltd (SLXP.O) and Jazz Pharmaceuticals Plc (JAZZ.O).
But Allergan also has said that it would give shareholders a fair chance to weigh Valeant and Pershing’s takeover proposal.
“While Allergan does not believe that Valeant’s offer provides compelling value relative to the alternatives available to the company, the board fully supports the right of stockholders to vote on the value proposition offered by Valeant at the appropriate time,” Allergan said on Aug. 22.
Ackman began accumulating his stake in February when he and Valeant started talking about buying Allergan together. He disclosed his stake on April 21, and the companies announced the offer on April 22, which instantly pushed Allergan shares higher and created US$1 billion in paper gains for Ackman.
Allergan has sued both Ackman and Valeant for insider trading in federal court in California, saying that aspects of their unusual arrangement violated securities regulations. A judge declined to expedite Allergan’s insider trading case against Valeant, which may have delayed the special meeting.
(Reporting by Soyoung Kim and Olivia Oran in New York, additional reporting by Svea Herbst in Boston; Editing by Chizu Nomiyama and Meredith Mazzilli)
Photo courtesy of Reuters/Eduardo Munoz