The hostile takeover of Botox maker Allergan by hedge fund mogul Bill Ackman and serial acquirer Valeant Pharmaceuticals will soon be in the hands of shareholders, thanks to a Delaware Chancery Court judge.
The proposed takeover, valued at around $53 billion, got a shot in the arm Thursday when the judge fast-tracked a hearing to determine whether Ackman’s proxy solicitation of investors to call a meeting to throw out six of nine Allergan directors would violate its poison pill.
Allergan, which has vehemently declined the offer and loudly disparaged Valeant’s business model, instituted the pill after Ackman’s Pershing Square hedge fund took a 9.7 percent stake in the company and teamed up with Valeant to launch a takeover.
“Based on the judge’s comments from the bench, the court appears unlikely to allow Allergan to use its pill (or other tricks) to stand in the way of calling a special meeting to remove directors,” said an individual close to the situation.
Delaware Chancery Court Chancellor Andre Bouchard agreed with Pershing Square that the fear of possibly triggering the pill could make its effort to call a special meeting of shareholders “functionally meaningless,” saying the ability to call the shareholders’ meeting is “a critical right.”
“Why on earth would [soliciting proxies for a meeting] ever trigger” the pill? he asked Allergan’s lawyer.
The hearing on Pershing Square’s lawsuit on the matter is now set for July 7.
The hedge fund needs to convince 25 percent of Allergan investors to agree to call the special meeting, and it plans to start sending out proxies to gain their approval as early as next week. The process could take over a month.
The earliest date for the special shareholders meeting would be in August. But Allergan could draw out the process until November.