Top Proxy Advisory Backs Ackman On Allergan Meeting

Aug 7 2014 | 4:18pm ET

Another proxy adviser has lined up behind William Ackman’s call for a vote on tossing out Allergan Inc.’s board in favor of a new one—one that favors a $53 billion offer from Valeant Pharmaceuticals International.

Yesterday, Institutional Shareholder Service said Allergan investors should back the Pershing Square Capital Management chief’s call for a special meeting, where it said “significant governance issues… could be addressed.”

Pershing Square nominated six director candidates, enough to seize control of the board, after Allergan refused to open negotiations with Valeant. The hedge fund, which has a 9.7% stake in Allergan, needs investors holding 25% of shares to back its call for a meeting to force one.

ISS’ backing, which follows that of Glass Lewis & Co. on Monday, is significant, as many institutional investors rely on its recommendation.

“The ISS report should cause Allergan shareholders to question the credibility of a board that is pursuing frivolous litigation tactics and baseless attacks to delay or stop the right for shareholders to fix anti-shareholder bylaws, elect shareholder-friendly directors and to voice their concerns about Allergan’s poor corporate governance,” Ackman said, referring to Allergan’s lawsuit against Pershing Square and Valeant, alleging that their partnership amounts to insider-trading.

For its part, Allergan consoled itself with the fact that ISS—like Glass Lewis—made no decision on the merits of Valeant’s bid.

“These recommendations do not change the fact that Valeant’s offer is grossly inadequate, substantially undervalues Allergan, creates significant risks and uncertainties for Allergan stockholders and is not in the best interests of the company and its stockholders,” the company said.


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