Allergan (AGN) Advises Shareholders to Ignore Pershing Square

Allergan Inc (AGN) on Friday advised stockholders not to act on a proposal by investment firm Pershing Square Capital Management LP to replace a majority of the Botox maker’s board.

Bill Ackman’s Pershing Square, who together with Valeant Pharmaceuticals I’ntl Inc (VRX) have launched a hostile takeover offer for the California-based company, has named six people it says it wants on Allergan’s board of directors. The six members of the slate are: Betsy Atkins, Cathleen P. Black, Fredric N. Eshelman, Steven J. Shulman, David A. Wilson and John J. Zillmer. Given that there are nine directors on Allergan’s board of directors, Pershing Square will have majority control over the company if all six of its nominees are elected.

Allergan said in statement on Friday that its current board members have “significantly more industry experience” than Pershing Square’s nominees.

“Under the current Board’s leadership, which includes individuals with significantly more industry experience than Pershing Square’s recommended nominees, Allergan continues to execute on its plan to drive near- and long-term organic growth, enhance its growth prospects and continue generating significant value for all of Allergan’s stockholders,” the company said, noting that “Pershing Square’s attempt to replace a majority of the Allergan Board is a further effort to support Valeant in its bid to acquire Allergan at a grossly inadequate price that substantially undervalues the Company and creates significant risks and uncertainties for Allergan stockholders.”

Activist investor Bill Ackman, whose 9.7% stake makes him Allergan’s biggest shareholder, and Valeant Pharmaceuticals want to acquire Allergan and have offered about $53 billion in cash and stock for the company. That offer translates to $72 and 0.82 shares in Valeant Pharmaceuticals for each Allergan share.

So far, Allergan’s board has rejected the offer, calling it “grossly inadequate”.

Last month it was reported that billionaire hedge fund manager John Paulson, who owns more than 6 million shares of Allergan, supports a deal between the maker of cosmetology blockbuster Botox and Valeant Pharmaceuticals Inc.

Shares of Allergan, which have risen almost 50% year-to-date and 84% y/y, closed at $166.43 on Friday.

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