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Court orders Valeant to disclose details of Allergan merger bid
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The United States District Court for the Central District of California has issued a ruling in Allergan’s lawsuit against Valeant Pharmaceuticals and Pershing Square Capital Management for alleged insider trading and federal securities violations.
According to an Allergan press release, the court “found that Allergan raised serious questions as to whether Valeant and Pershing Square violated SEC Rule 14e-3, which prohibits trading on the basis of material nonpublic information when an offering person has taken a substantial step or steps to commence a tender offer of a target company.”
The court has ordered Valeant and Pershing Square to make corrective disclosures to their Sept. 24, 2014, proxy solicitation statement to comply with Section 14(a) of the Securities Exchange Act and Rule 14a-9 promulgated thereunder, “including disclosure of the facts underlying Defendants’ exposure to liability under Section 14(e) of the Securities Exchange Act and Rule 14e-3 promulgated thereunder,” according to the release.
The court also ordered that Pershing Square and Valeant must disclose that a Feb. 25 relationship agreement between the two companies stated Pershing Square and Valeant would be called co-bidders if the Allergan-Valeant transaction occurred by way of tender offer, the release said.
The court acknowledged Allergan’s claim that Valeant, Pershing Square and PS Fund 1 “violated a federal rule by causing PS Fund 1 to acquire Allergan shares between February and April 2014 without publicly disclosing information about Valeant’s plans for a tender offer.”
“We are pleased that the Court ruled there are serious questions as to the merits of Allergan’s insider trading case against Pershing Square and Valeant, and ordered them to revise their disclosures to reflect the truth behind their hostile acquisition plan,” Allergan stated in the release.
The court order also allowed Valeant to proceed with a special shareholders’ meeting scheduled for Dec. 18. Valeant, Pershing Square and other Allergan shareholders will be allowed to vote out a majority of the Allergan board of directors at the meeting, according to a Valeant press release.
“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,” J. Michael Pearson, chairman and CEO of Valeant, said in a press release from the company. “We look forward to the Dec. 18 special meeting, where we hope to move a large step closer to the compelling combination of Valeant and Allergan that will create an unrivaled platform for growth and value creation.”