Allergan Pact Advances -- WSJ
January 17 2018 - 2:02AM
Dow Jones News
By David Benoit and Jonathan D. Rockoff
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 17, 2018).
A federal judge signaled Tuesday he would approve a $290 million
settlement reached by Pershing Square Capital Management, Valeant
Pharmaceuticals International Inc. and the shareholders of Allergan
PLC who had alleged the two firms improperly profited from their
failed attempt to buy the maker of Botox.
In a hearing Tuesday, the judge also said he intended to
publicly issue a final version of a tentative opinion he had
privately issued last month that rejected two key legal arguments
Pershing Square and Valeant had made. The judge said he wanted his
order to become part of legal case law, according to people
familiar with the hearing.
The judge's views were being closely watched by hedge funds and
others wondering if the trading strategy could be replicated.
The settlement was reached last month to end a suit that
threatened the profits of Valeant and Pershing Square founder and
CEO William Ackman on their lucrative Allergan partnership, which
earned them collectively about $2.6 billion, though they failed to
buy the company as they intended.
The hedge fund and the pharmaceutical company tried to buy
Allergan for more than $50 billion in early 2014. The hedge fund
took a 9.7% stake in Allergan to try to win enough support for the
deal. But the bid failed when Actavis PLC swept in with a $66
billion offer for Allergan.
The sides reached an agreement to settle last month, with
Pershing Square set to pay $193.75 million and Valeant to pay
$96.25 million.
Earlier this month, the judge said he had questions about the
agreement and called a hearing for Tuesday, raising questions about
whether he might reject it. At the hearing, the judge said the
agreement was "fair to the parties" and canceled the planned trial
date for next month.
"The court has vacated the trial date and indicated its
preliminary approval of the settlement subject to submission of
final papers and associated hearings," Valeant said in a
statement.
Both Valeant and Pershing Square reiterated Tuesday the
settlement was in their best interests and would allow them to put
the suit behind them.
The plaintiffs, led by the State Teachers Retirement System of
Ohio and the Iowa Public Employees' Retirement System, sold
Allergan shares as Pershing Square was buying. They contend that
Pershing Square and Valeant profited from inside information.
The suit had hinged on the rules that govern tender offers for
stock. It is illegal for someone who has taken "substantial steps"
toward launching a tender offer to tip off another party.
Pershing Square and Valeant say they partnered, so Pershing
Square couldn't have been trading on another party's information
and that they originally decided against a tender offer, so they
couldn't have taken steps toward one. They later launched one.
In his tentative opinion, the judge had said the duo had both
taken substantial steps and weren't legally the kinds of partners
that could trade ahead of a tender offer. He had said in prior
hearings that he hadn't made up his mind and could change the final
ruling.
Write to David Benoit at david.benoit@wsj.com and Jonathan D.
Rockoff at Jonathan.Rockoff@wsj.com
(END) Dow Jones Newswires
January 17, 2018 02:47 ET (07:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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