Special meeting could remove poison pill and clear way for takeover bid by Valeant
Proxy advisory firm Glass Lewis has backed calls for a special shareholder meeting at Allergan, the manufacturer of Botox, bolstering moves by activist investor Bill Ackman to skirt poison-pill defenses and orchestrate a takeover of the company.
Glass Lewis recommends that Allergan shareholders support the efforts of Ackman – through his Pershing Square Capital Management firm – to hold a special shareholder meeting that could vote on the replacement of six board members. It could also eliminate a series of administrative hurdles Allergan has erected as a poison pill to avoid a takeover.
Pershing Square announced in April that it had accumulated a 9.7 percent stake in Allergan and had allied with Canadian healthcare company Valeant Pharmaceuticals International in a $50 bn bid for Allergan. Allergan rejected the offer, which has since been raised to $53 bn in cash and stock.
Ackman and Valeant are now seeking the 25 percent shareholder support needed to call a special shareholder meeting to elect a slate of independent board members, change Allergan’s bylaws and eliminate a series of barriers to a takeover.
‘In our opinion, this procedural dichotomy casts a rather dubious light on the seriousness of the board’s desire to be responsive to investors,’ Glass Lewis says, according to a copy of the note quoted by Pershing Square. ‘This obstructive process echoes a trend of recalcitrant adherence to progressive corporate governance standards at Allergan, including a period marked by active opposition to shareholder proposals covering the right to act by written consent and the separation of the roles of chairman and CEO.’
Allergan last week filed a lawsuit against Pershing Square and Valeant, claiming the takeover bid violated securities laws against insider trading. Allergan alleges that Pershing Square and Valeant had planned the takeover bid before Pershing Square accumulated its stake in Allergan, and that Pershing Square has benefited from privileged information because the stake’s value rose with the offer.
