Allergan Clears Up Pershing Square Poison Pill Confusion

Jun 30 2014 | 9:38am ET

Botox-maker Allergan Inc. and its largest shareholder—hedge fund Pershing Square Capital Management—have reach an accord, on one of their disputes, anyway.

The pharmaceutical company has settled a lawsuit brought by Pershing Square over its poison pill, which it adopted after the hedge fund took a 9.7% stake in the company in conjunction with Valeant Pharmaceuticals International, which is seeking a hostile takeover of Allergan. Under the terms of the deal, Allergan has agreed that Pershing Square’s plan to call a special investor meeting to seek the ouster of a majority of its board would not trigger the poison pill.

“This resolution provides the clarification we were seeking to allow Allergan shareholders to proceed with the process of calling a special meeting without fear of tripping the pill,” Ackman said. Pershing Square brought the lawsuit after, it alleged, Allergan had refused to clarify whether its efforts would trigger the poison pill.

For its part, Allergan said the deal “simply makes it clear how the bylaws” and poison pill “work together,” and said it was “pleased” to deal with the matter “without the need of guidance from the Delaware court.”

Valeant has offered $53 billion for Allergan and has launched a tender offer after Allergan thrice rejected its advances.

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