Allergan's poison pill can't stop Valeant from calling shareholders to a vote

Valeant ($VRX) has cleared another hurdle in its quest to buy Allergan ($AGN). The key next step: a special shareholders meeting, where Valeant will try to shake up the company's board and overturn its acquisition defenses to get a $53 billion deal done.

Allergan and lead shareholder Pershing Square Capital Management--run by Valeant's dealmaking partner Bill Ackman--agree that calling a meeting won't trigger the Botox maker's poison pill defense. Pershing Square slapped Allergan with a lawsuit earlier this month, seeking confirmation that it could proceed with its meeting plans.

Allergan said it's happy to settle with Pershing Square. The California-based company "is pleased that it was able to address the rights of all stockholders without the need of guidance from the Delaware Court," it said in a statement. Allergan had passed the defense plan to prevent any single shareholder from acquiring more than 10% of the company.

Valeant CEO J. Michael Pearson

It's a step in the right direction for Valeant, whose CEO J. Michael Pearson last week said he expects Allergan shareholders to accept his company's offer. If the meeting does happen then "both sides know how this will come out," he told The Wall Street Journal.

But first, Canada-based Valeant needs to round up support for the meeting, which requires backing from investors holding 25% of Allergan shares. Between Pershing Square's 9.7% stake and the 6-million-plus shares recently picked up by reported Valeant fan Paulson & Co., Valeant and Ackman need another 13% or so to call it, BMO Capital Markets analyst Alex Arfaei wrote in a note to clients.

Bill Ackman

Pearson says at least 20% of Allergan shares are in the hands of arbitrage investors and hedge funds likely to be pro-deal, Arfaei noted. And taking that into account--as well as "significant overlap" among Valeant and Allergan's investors--he believes the Valeant-Ackman team will eventually make it to 25%, he said.

Allergan, for its part, hasn't stopped trying to convince its shareholders to let it fly solo. Monday, the company touted an FDA approval for its sustained-release biodegradable steroid implant, Ozurdex, as a new therapy for diabetic macular edema. But it wasn't all good news for Allergan on the regulatory front: The agency shot down acute migraine aerosol Semprana, handing Allergan a complete response letter instead.

- see Bloomberg's take

Special Reports: Pharma's top 10 M&A deals of 2013 - Valeant/Bausch + Lomb | The most influential people in biopharma today - J. Michael Pearson - Valeant