Gaining further support, Allergan's (AGN) largest stakeholder Pershing Square Capital Management submitted requests for a Special Meeting to the company from stockholders owning 1.5% of Allergan shares. The special meeting, which will take place on Dec 18 this year, will allow the shareholders to vote on whether to replace most of the current board members at Allergan so as to facilitate the sale of the Botox maker to Valeant Pharmaceuticals International (VRX).
The hedge fund company had submitted requests for a Special Meeting from shareholders owning 31% and 2.8% of Allergan last month and last week respectively. This implies that Pershing Square has now secured support from shareholders owning 35% of Allergan on the Special Meeting issue.
Pershing Square, a hedge fund management company run by billionaire activist Bill Ackman, has been trying to ensure that Allergan is sold to Valeant. Pershing Square owns almost 10% of Allergan’s shares.
Valeant has been pursuing Allergan since Apr 2014 but the latter has steadfastly rejected the offers stating that Valeant’s offer undervalues the company and is not in the best interest of its shareholders. In fact, Allergan has filed a lawsuit to prevent Valeant, Pershing Square and Ackman from voting their shares at the special meeting in December (read more: Allergan Seeks Court Order to Stop Valeant, Affiliates).
According to media reports, Ackman even wrote an acerbic letter to Allergan’s current board of directors earlier this week taking the company to task for not even discussing the takeover offer(s) put forward by Valeant. As per a Reuters report, Ackman is hoping to replace the majority of the unresponsive board with directors of his own choice to ensure that the deal goes through.
With Ackman’s hedge fund now securing the support of shareholders owning 35% of Allergan, the company’s by-laws (requiring 25%) would be met even if the court rules in favor of Allergan, barring Ackman from casting his votes. We expect investor focus to remain on the development of this controversial issue.
Allergan carries a Zacks Rank #1 (Strong Buy). Equally well-ranked stocks in the health care space include Gilead Sciences (GILD) and Regado Biosciences (RGDO).
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