A federal judge will consider whether Allergan Inc.’s insider-trading lawsuit against hedge-fund Pershing Square Capital Management should proceed at an accelerated pace later this month.
U.S. District Judge David Carter in Santa Ana, Calif., will hear arguments on Allergan’s request to expedite its case on Aug. 20. The Botox-maker alleges that Pershing Square’s partnership with Valeant Pharmaceuticals International, which is pursuing a hostile $54 billion takeover of Allergan, amounts to insider-trading and wants the hedge fund’s purchase of a nearly 10% stake in the company invalidated. A finding that securities laws were violated would also allow Allergan to reject a shareholder request for a special meeting, at which Pershing Square hopes to take control of the company.
Allergan has bitterly opposed Valeant’s approaches, refusing to even meet with the company and lambasting its business strategy. The company insists that it is better off on its own and has begun a cost-cutting program to sway investors. But two top proxy advisory firms have recommended that investors back Pershing Square’s call for a special meeting, which requires 25% support.
Pershing Square’s William Ackman has dismissed Allergan’s lawsuit as a “shameless attempt… to delay shareholders’ fundamental right to call a special meeting,” and “demonstrates why this board of directors should be removed.”