There has been quite a commotion as of late in the pharmaceutical industry as two major competitors refuse to step away from what they want most: More power and money.
Allergan, a pharmaceutical company most famous for it’s Botox innovation, is suing Valeant Pharmaceuticals and hedge fund manager William A. Ackman — another jab in the already heated battle to prevent a major buyout by Valeant.
For the past few weeks, Valeant has offered to buy out Allergan for $50 billion, to which the Botox company refused. Valeant then raised the stakes to $53 billion, to which Allergan still refused. The Botox innovator believes that it can manage just fine without being bought out by their competitor, who also recently merged with Bausch and Lomb.
Allergan generates most of it’s annual revenue from their Botox drug, which is the most widely used drug for smoothing wrinkles. Botox treatments are one of the most common cosmetic procedures today, with the Botox industry generating an estimated $1.3 billion dollars in the United States every year.
Bringing this lawsuit, which was filed on Friday August 9, into light is the most aggressive move yet in the epic struggle against these two industry giants. The claim states that Mr. Ackman improperly built up his 10% stake in Allergan as he set up to make a bid with Valeant. The claim also accuses Pershing Square Capital Management (Ackman’s hedge fund) and Valeant of failing to reveal required information needed for the takeover. Most importantly, the suit asserts that insider trading occurred
Mr. Ackman’s accumulation of Allergan shares was not illegal, but it is highly unheard of in the business world as not many investors and corporate buyers team up to make a multi-billion dollar unsolicited offer to a major company.
Although Valeant and Pershing Square attempted to make a friendly offer with Allergan this past April, they were turned down and, according to Allergan, went hostile by trying to reach a deal without the consent of Allergan’s management.
Valeant denied the accusations made my Allergan and claimed that “Allergan’s true purpose in bringing the litigation is an attempt to interfere with shareholders’ efforts to call a special meeting.”
Mr. Ackman also had a few words to say about the latest attach in the ongoing battle, stating that the suit was an effort to delay the shareholder vote to replace Allergan’s board.
“Allergan is threatened by our progress toward calling the special meeting,” Ackman said. “This scorched-earth approach is further evidence of the board’s and management’s entrenchment.”
Mr. Ackman and Valeant are confident that they will still be able to call this special meeting, despite the possible delay due to Allergan’s lawsuit.