After months of battling between Allergan ($AGN) and its pursuers, Valeant ($VRX) and Pershing Square Capital Management, the two sides have reached a truce--at least when it comes to an upcoming shareholder meeting.
On Monday, Allergan announced that it had agreed to hold the special meeting on its originally scheduled date of Dec. 18. And in return, its hostile suitors dropped their pending lawsuit, which was meant to speed up the meeting and thwart any defensive M&A attempts by the Botox maker.
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| Bill Ackman |
Squabbling over the meeting date spurred lawsuits on both sides. And with its significance in the takeover battle, it's no wonder: At the meeting, Pershing Square leader Bill Ackman hopes to overturn Allergan's board and replace the majority of its directors with a new, deal-friendlier slate.
The California drugmaker, which has repeatedly termed Valeant's bid "grossly inadequate," has until now done what it can to block the meeting. In August, it sued the Valeant-Ackman team, accusing the duo of insider trading; while Allergan will continue to pursue that litigation, it will stop trying to delay or cancel the meeting, Pershing Square told Reuters Tuesday.
Now, with the date of the meeting finally nailed down, both sides will gear up for the shareholder vote that could seal their fates. Valeant CEO J. Michael Pearson, for one, has said he's confident his company will prevail, noting in June that "both sides know how this will come out."
But according to BMO Capital Markets analyst David Maris, Allergan still has time to use some M&A of its own to keep shareholders loyal. Completing a deal--especially one of the tax-inversion variety--could make Allergan too big for Valeant to swallow and potentially negate the low tax rate Valeant has put forth for a combined company. And the way Maris sees it, Allergan has plenty of prospects.
"We continue to think Allergan is in the catbird seat with multiple deal options," he wrote in a Tuesday note to clients.
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