MONTREAL - Valeant Pharmaceuticals and hostile bidding partner Pershing Square Capital Management claimed a legal victory Tuesday after a U.S. district court judge refused Allergan's quest to block them from voting at the Botox maker's shareholder meeting next month.
"Today's ruling is a victory for all Allergan shareholders as it puts the choice of Allergan's future in the hands of its owners," said Valeant CEO Michael Pearson.
Pearson said the Dec. 18 special meeting, which was called to remove a majority of Allergan's board of directors, will be a step closer to the combination of the two pharmaceutical rivals.
Allergan (NYSE:AGN) responded to the ruling by threatening to file an emergency appeal to bar the investment firm, its largest shareholder, from voting at the meeting.
"The Allergan board has a duty to ensure that any stockholder voting on corporate matters acquired their shares in accordance with the law," it stated.
The California-based company claimed before the court for the central district of California that Pershing Square's nearly 10 per cent ownership stake was illegally acquired in contravention of U.S. securities laws.
Judge David Carter found that Allergan raised serious legal questions about the efforts of Pershing Square and Valeant in mounting a hostile takeover bid.
However, he said in a 30-page ruling that Allergan had not proven that allowing Pershing Square and Valeant (TSX:VRX) to vote at the meeting would result in "certain or imminent harm."
Carter ordered Pershing Square to include more details about its plan with Valeant to be referenced as "co-bidders," the lawsuit alleging that insider trading rules were violated and the court's findings that serious questions were raised about that violation to its Sept. 24 proxy statement.
Shibani Malhotra of Stern Agee said he expects Allergan to more aggressively consider its alternatives, including a friendly takeover with Actavis, as was reported Monday by the Wall Street Journal.
"We see today's ruling as a positive for Actavis as we believe a deal for Allergan would create value for Actavis shareholders. It is also possible that Valeant may now be more inclined to formally increase its bid for Allergan," he wrote in a report.
Quebec-based Valeant Pharmaceuticals said last week that it was prepared to raise is hostile takeover bid for Allergan to at least US$200 per share or more than US$60 billion.
Allergan is considering a number of options to thwart Valeant, including a strategic acquisition, the repurchase of its own shares, a special dividend and a friendly alternative to Valeant.
The company has repeatedly rebuffed Valeant's efforts since it first submitted its offer in April, claiming the price was too low.
On the Toronto Stock Exchange, Valeant's shares closed up $1.51 to $152.41 Tuesday on the Toronto Stock Exchange and gained 76 cents to US$133.61 in New York. Allergan's shares climbed $1.98 to US$195.12 on the New York Stock Exchange.
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