On Thursday, a judge ruled that an Allergan lawsuit against Valeant wouldn't delay a potential special meeting of Allergan shareholders, at which the Canadian pharma hoped to oust the Botox-maker's board and strike its takeover defenses. The news came not a moment too soon for Valeant, which now says it has successfully rounded up the support needed to call that meeting.
As part of their $53 billion hostile acquisition attempt, Valeant ($VRX) and partner Pershing Square Capital Management--now Allergan's ($AGN) largest shareholder--will submit a request on Friday to Allergan for a special shareholders meeting, Reuters reports, citing CNBC's sources. According to those sources, the takeover team has support from investors holding more than 30% of Allergan shares, which tops the 25% threshold dictated by Allergan's bylaws.
In a move that Valeant dubbed a delay tactic, Allergan filed a lawsuit earlier this month in a California court, pointing fingers at Valeant and Pershing Square's Bill Ackman for insider trading. The company requested an expedited ruling for that case, which could have stalled the meeting had the litigation come up in Allergan's favor before the hostile bidders hit that 25% target.
But U.S. District Judge David Carter refused to rule within 120 days, saying the court didn't see enough justification for accelerating Allergan's case over the others waiting in line. Doing so could "create a precedent that allows corporations to demand at will the immediate attention and input of the federal courts in order to resolve intra-corporate disputes that might be better left to the dynamic free market or to the state court," he said, as quoted by MarketWatch.
Now, all eyes will be on the meeting, where Ackman will put forth his slate of new Allergan directors--a lineup he announced in July. From there, he hopes to nix Allergan's poison-pill defense, paving the way for Valeant to buy the company.
Valeant CEO J. Michael Pearson, for one, remains confident that the pair can get the job done. As he put it last month, once Valeant and Pershing Square manage to convene the meeting, "both sides know how this will come out."
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