Allergan Sues Valeant and Pershing Square

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IRVINE, Calif.— Valeant Pharmaceutical’s (VRX.TO) and Pershing Square Capital Management’s $51 billion hostile takeover bid for Allergan (NYSE: AGN) is taking a new turn with Allergan’s announcement that it filed a lawsuit today in the U.S. District Court for the Central District of California alleging that Valeant, Pershing Square and its principal, William A. Ackman, violated federal securities laws prohibiting insider trading, engaged in other fraudulent practices, and failed to disclose legally required information.

In its complaint, Allergan is seeking, among other remedies, a declaration from the court that Pershing Square and Valeant violated insider trading and disclosure laws, and an order rescinding Pershing Square's purchase of the Allergan shares that Allergan claims were acquired illegally.

The complaint alleges, among other things, that Valeant always directed the unsolicited transaction to acquire Allergan toward a tender offer. In addition, the complaint alleges that debt-laden Valeant did not have the resources to acquire Allergan, and therefore sought third-party financing assistance from Ackman and his hedge fund, Pershing Square. By the time Valeant and Pershing Square entered into their financing agreement, Valeant had hired financial and legal advisors, held multiple board and committee meetings, and negotiated the respective financial commitments of the parties.

Valeant, Pershing Square and Ackman have not yet responded to the suit.