This article is more than 5 years old. Information may no longer be current.
Allergan rejects Valeant reach out, Ackman threatens suit over Salix
Click Here to Manage Email Alerts
Allergan has received letters from J. Michael Pearson, chairman and CEO of Valeant, and William A. Ackman, CEO of Perishing Square Capital Management, in response to recent events surrounding the proposed merger between the companies.
“It may be too late, but we still have an opportunity to take the temperature down and come together to see if we can begin a conversation that could lead to even more value for your stockholders, while still being the right transaction for ours,” Pearson wrote in the letter from Valeant to Allergan.
According to a press release from Valeant, David E.I. Pyott, chairman of the board and CEO of Allergan, and Michael R. Gallagher, lead independent director of Allergan, offered a response in a subsequent letter, which included the following: “Valeant’s offer is grossly inadequate and substantially undervalues Allergan from both the outset of this matter and particularly in consideration of the enhancements Allergan recently made to its anticipated business results.”
In a follow-up response, Pearson defended Valeant’s position, explaining that the company’s pending third-quarter results are expected to beat consensus on revenue and be better than guidance on cash earnings per share, organic growth, restructuring charges and adjusted cash flow from operations, according to the release.
In a separate letter to Allergan, Ackman threatened to sue the company over a potential deal with Salix Pharmaceuticals and demanded that Allergan’s board of directors commit to the Valeant transaction, according to a second press release.
“By undertaking an acquisition without a shareholder vote, with the purpose and desired effect of frustrating a Valeant transaction, you are breaching your commitment that shareholders would have a vote on the value proposition offered by Valeant. We do not believe you can lawfully undertake such a transaction, particularly given your failure to engage with Valeant,” Ackman wrote. “If you take such action, we will immediately bring litigation against you (and any counter-party that aids and abets you) for breach of fiduciary duty.”