Allergan (AGN) and Pershing Square have agreed to settle one of their lawsuits and hold a special meeting on Dec. 18 to decide the future of Valeant Pharmaceuticals (VRX) hostile takeover. The Wall Street Journal explains:
Reuters Under the settlement, announced by Allergan late Monday, the meeting would happen even if some shareholders who called it sell their shares, reversing a rule that Pershing Square’s William Ackman had criticized.
Pershing Square had sued Allergan in Delaware to force the special meeting and challenge such bylaws. A judge in the case last week referred to the rules as “quite a horse-choker” in pressing Allergan’s lawyers to defend them, according to a transcript.
The settlement doesn’t end ongoing litigation in a federal court in California where Allergan sued Pershing Square and Valeant alleging their agreement violated insider-trading regulations. The two say they did nothing illegal.
BMO’s David Maris urges investors to reject Valeant’s bid for Allergan:
We continue to think Allergan is in the catbird seat with multiple deal options. We believe that Allergan shareholders should reject the Valeant offer, for the value and uncertainty of the stock component, especially given Valeant's debt levels, IRS audit, and a potential SEC investigation reported by several news outlets. Add to this our complete conviction that the Valeant proposed operating cost cuts are not feasible without severely and negatively impacting the Allergan business and impairing its potential. We maintain our Outperform rating and $230 price target for Allergan stock.
Shares of Valeant have gained 0.3% to $121.80 at 11:53 a.m., while Allergan has risen 0.6% to $169.56.
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