Valeant one-ups Allergan with lawsuit to thwart defensive M&A

Ever since Valeant Pharmaceuticals swooped in for a takeover, Allergan executives and analysts have suggested a way out: Allergan could hustle up its own deal. Now, a Valeant lawsuit could close that exit, at least for now.

In an increasingly bitter takeover fight, the companies have used the courts to pursue their own agendas. Now that Allergan ($AGN) has failed to speed up its legal quest to stop a special shareholder meeting, Valeant ($VRX) on Friday filed another suit pushing to hold that meeting sooner.

The Quebec-based pharma, along with partner Bill Ackman, asked a judge to force Allergan to hold the meeting--a key step in its $53 billion hostile pursuit--before the year is out. And, Valeant hopes, before Allergan has a chance to thwart the deal with a pickup of its own.

The suit follows the Valeant-Ackman team's official request for a special meeting, which it delivered late Friday after gathering the requisite support from investors, The Wall Street Journal reports. Once the meeting is called, the pair figures, it can oust the majority of Allergan's board and nix its poison pill defense, clearing the way for Valeant to complete its long-desired transaction.

Allergan has 120 days to set the date for the special meeting, but legal wrangling could push it back until 2015, sources on both sides told the Journal. With their latest lawsuit, Valeant and Ackman are after a ruling that deems their requests legitimate; they're worried Allergan will attempt its own deal before investors' opinions are heard, they say.

Allergan so far has tried a variety of maneuvers to block the merger, including asking a judge to expedite a California court's review of an insider trading lawsuit filed earlier this month. The bid could have stalled the special meeting had U.S. District Judge David Carter not shot it down, saying he didn't see reason for Allergan's case to jump the queue.

But the California company could have more up its sleeve--such as a long-rumored acquisition. Now that one-time buyout target Shire ($SHPG) has been swallowed by AbbVie ($ABBV), Allergan had reportedly been talking to North Carolina-based Salix ($SLXP), which--depending on a potential deal's structure--could help Allergan complete a tax inversion, thanks to Salix' recent agreement to buy the Irish unit of Cosmo Pharmaceuticals ($COPN). Those talks are said to be dormant, however, at least for now.

- read the WSJ story (sub. req.)

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