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May 14 2014 | 12:16pm ET
Pershing Square Capital Management is looking to its fellow Allergan Inc. shareholders to pressure the Botox-maker to negotiate with Valeant Pharmaceuticals International, whose $46 billion takeover offer it rejected on Monday.
The New York-based hedge fund yesterday disclosed that it demanded a list of registered shareholders from Allergan, with plans to hold a referendum on whether the company should speak with potential buyers. Pershing Square chief William Ackman told The Wall Street Journal that the non-binding poll would give “shareholders an opportunity to express their point of view. What could be more democratic than that?”
The unusual maneuver, taken instead of seeking to force a special meeting, helps Pershing Square sidestep Allergan’s poison pill, which not only blocks the hedge fund from increasing its 9.7% stake, but also limits its communications with shareholders. Proxy campaigns are excluded from the restrictions.
The referendum also keeps Pershing Square in control of the process; if a special meeting were called, Allergan would have up to four months to schedule it.
Allergan, which called Valeant’s Pershing Square-backed offer too low, and which said it prefers to remain independent, said that the referendum was a “self-serving enterprise” that allows Valeant and the hedge fund to dictate “their own process.”
Valeant also made clear that it wasn’t giving up, saying it would improve its cash-and-stock offer on May 28. It is unclear whether the company will make a higher offer or increase the amount of cash in the deal, in an effort to entice Allergan to the negotiating table.