Bid for Allergan turns hostile as Ackman calls for shareholder meeting

Activist investor Bill Ackman wants Allergan shareholders to dump six unnamed directors

The jockeying for control of Botox maker Allergan Inc. is getting downright hostile — and even more bizarre.

Activist investor Bill Ackman called for a special meeting at which Allergan shareholders could potentially vote out the bulk of the Irvine company's board of directors. He wants shareholders to dump six unnamed directors.

It's the latest move by Ackman and Valeant Pharmaceuticals International Inc. to pressure Allergan to acquiesce to an unsolicited buyout offer. The hedge-fund manager and Canadian drug maker have teamed in a $53-billion joint bid to acquire Allergan.

"We believe the market has spoken and that shareholders see substantial value in Valeant's revised proposal," Ackman's firm, Pershing Square Capital Management, said in an SEC filing Monday. "To date, the board has refused to engage with Valeant in any way regarding a merger with Valeant."

Allergan thus far has been cool to the repeated overtures, and it prodded its shareholders Monday to do nothing.

"Allergan urges all of its stockholders to refrain from taking any action, including returning any proxy card sent by co-bidders Pershing Square and Valeant, until they have reviewed the recommendation of Allergan's board of directors," Allergan said.

The call for the special meeting is the latest gambit in an increasingly unorthodox takeover attempt.

The suitors initially called for a nonbinding shareholder referendum to force Allergan to the negotiating table. But they appear to have abandoned that plan amid concern that the referendum could trigger a so-called poison-pill takeover defense that would make their quest even more difficult.

J. Michael Pearson, Valeant's chief executive, reportedly said in a conference call that he would initiate a hostile tender offer if Allergan's board rebuffs him.

Allergan spurned an initial bid in April, prompting Ackman and Valeant to raise their offer twice. The latest came last week, even though Allergan hadn't yet responded to the first increase in offer price.

In the latest proposal, Valeant would pay $72 in cash and 0.83 share of Valeant stock for each share of Allergan stock. The cash offer is $23.70 higher than the original bid April 22.

Valeant retained a provision from its second offer related to future sales of a medication to treat an eye condition.

Valeant would pay Allergan shareholders up to $25 a share based on a sales target of Darpin, a medication in early stages of development. The company said it would invest up to $400 million and retain Allergan employees to develop the drug.

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