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Allergan adopts poison pill following Valeant bid
April 23rd, 2014
IRVINE, Calif. – Allergan Inc. has enacted a shareholder rights plan in the wake of an unsolicited, $47 billion bid to acquire the company by Valeant Pharmaceuticals International Inc. and hedge fund Pershing Square Capital Management.
Allergan said Tuesday evening that its board unanimously adopted a one-year stockholder rights plan, effective immediately, and declared a dividend distribution of one preferred share purchase right on each outstanding share of the company's common stock.
"The plan is not intended to prevent an acquisition of the company on terms that the board considers favorable to, and in the best interests of, all stockholders. Rather, the plan aims to provide the board with adequate time to fully assess any proposal," Allergan said in a statement.
Under the plan, shareholders of record at the close of business on May 8 will get one right for each share of Allergan common stock held on that date. The rights will become exercisable if a person or group acquires beneficial ownership of 10% or more of Allergan's common stock.
Laval, Quebec-based Valeant announced its bid to acquire Allergan on Tuesday morning. Valeant said Pershing Square is a co-proponent of the merger proposal, which was made in a letter to Allergan chairman and chief executive officer David Pyott and the company's board. Pershing Square, led by CEO William Ackman, is Allergan's largest shareholder, with a 9.7% stake in the pharmaceutical company.
On Monday, Allergan said that it became aware of public filings made by Valeant and Pershing Square regarding a merger proposal by Valeant, and that it has had no talks with either company about the bid. Then late Tuesday morning Allergan confirmed that it received an unsolicited merger bid from Valeant.