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Jun 23 2014 | 9:36am ET
Pershing Square Capital Management will learn sooner rather than later whether its effort to take control of Allergan Inc. will trigger the pharmaceutical company’s poison pill provision.
A Delaware Chancery Court judge has expedited the hedge fund’s lawsuit against Allergan, which seeks clarity on the matter. Pershing Square alleges that Allergan has refused to say whether its plan to seek a special shareholders meeting will trigger a poison pill that bars investors from buying more than 10% of its shares.
Pershing Square needs investors holding 25% of Allergan shares or more to call the meeting.
“Without some level of coordination, that 25% threshold in the bylaw could never be reached, it would seem to me,” Chancellor Andre Bouchard ruled. “The rub here, as I see it, is that the stockholders’ ability to exercise their franchise rights by calling a special meeting… can be rendered functionally meaningless as a practical matter because of the deterrent effect.”
Bouchard scheduled a hearing for July 7.
Allergan had insisted that the question was a “hypothetical issue” unworthy of the court’s attention.
Pershing Square is working with Valeant Pharmaceuticals International on its $53 billion bid for Allergan, which the latter has rejected. The hedge fund says it plans to seek the replacement of a majority on Allergan’s board at the special meeting. For its part, Valeant last week launched a tender offer for Allergan, seeking approval for the deal from the latter’s shareholders.