Allergan buy Salix? Not so fast, say investors intent on Valeant vote

Jackson Square CEO Jeff Van Harte

Valeant Pharmaceuticals ($VRX) isn't the only one who thinks Allergan ($AGN) should hold off on dealmaking till shareholders say their piece at a December special meeting. Three top-15 Allergan shareholders are urging the Botox maker to delay until investors weigh in on Valeant's hostile bid.

The shareholder demands follow news last week that Allergan had been "closing in on" a deal for Salix Pharmaceuticals ($SLXP)--and that the deal could thwart Valeant's buyout efforts. On Sunday, Jeff Van Harte, CEO of eighth-largest Allergan shareholder Jackson Square, accused Allergan's board of focusing on "hastily closing a large acquisition."

"This approach appears to be intended to not only preempt shareholder approval, but also eliminate interest from the various bidders for the company," he wrote in a letter to Michael Gallagher, Allergan's lead independent director.

His concerns echoed those voiced Friday by No. 3 shareholder T. Rowe Price Group and No. 12 shareholder Pentwater Capital Management, which said Allergan shouldn't proceed with any premeeting pickups--even those of the all-cash variety, which normally don't require a vote--without shareholder approval, Bloomberg reports.

That way, shareholders would have the opportunity to vote on a new, Valeant-deal-friendly slate of directors, proposed by the Canadian pharma's buyout partner, Bill Ackman.

"Over the past several months, we have been watching with growing concern the corporate governance practices of the Allergan board," T. Rowe spokesman Bill Benintende said in a statement seen by the news service. "The issues to be voted on at the special meeting of shareholders on Dec. 18 are of such importance that they impose a special duty on the board to refrain from approving any significant, irreversible commitments by the company between now and then unless shareholders are offered the opportunity to vote on them."

Of course, there's no guarantee Allergan will have a chance to snag Salix--or another Valeant blocker--before then anyway. At least one of the California company's rumored buyout targets, Shire ($SHPG), has already been snapped up since the Valeant/Allergan saga began. And though Allergan/Salix talks have reportedly been going on for weeks now, CNBC reported last week that Actavis ($ACT)--which at one point offered to buy Allergan itself--has now moved in on the North Carolina drugmaker.

But if an Allergan deal for Salix does go through, Ackman will be ready. In that instance, he'll "immediately bring litigation" against Allergan and "any counterparty that aids and abets" it for breach of fiduciary duty.

- read Van Harte's letter
- get more from Bloomberg here and here

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