Pershing Square Capital Urges Allergan To Consider Valeant Proposal

(RTTNews) - Pershing Square Capital Management L.P. has released an open letter sent to the Board of Directors of Allergan Inc. (AGN), concerning the board's governance failures with regard to its handling of Canadian drug maker Valeant Pharmaceuticals International's (VRX.TO, VRX) merger proposal.

Pershing Square Capital strongly urged the independent directors of the board to analyze the revised Valeant proposal with the assistance of independent counsel and advisors, hired by the independent directors rather than by management, who do not have a preexisting client relationship to protect, nor a predisposition against shareholder activism or unsolicited transactions, and who have a strong track record for protecting and enhancing shareholder interests.

Pershing Square Capital again requests the opportunity to meet with the independent directors at their earliest convenience.

Valeant has publicly stated that it intends to improve its proposal and address concerns raised by Allergan in its presentation on May 28th. Oftentimes, even the highest quality legal and financial advisors in a change-in-control situation can be conflicted by a desire to maintain a relationship with a longstanding corporate client that will be foregone if the company is sold.

Pershing Square today said that the Chairman and CEO of Allergan David Pyott has a disabling conflict of interest that arises from the fact that he will lose his leadership role at the company and likely his job as a result of the transaction. As such, he cannot independently represent the company in considering the Valeant merger.

The Chief Executive Officer of Pershing Square Capital Management, William Ackman, said that the Board Erred in not meeting with Valeant before rejecting its proposal and in designating mr. pyott as the "only member of the board that is authorized to speak with shareholders.

Ackman had disclosed a 9.7% stake in Allergan in April.

Ackman today said that Pyott has behaved inappropriately in inaccurately criticizing Valeant and Pershing Square.

Pershing Square believed that the current Valeant proposal, which offers shareholders $48.30 in cash and approximately 43% of the combined Valeant and Allergan, is a far superior alternative to Allergan as a standalone enterprise, even considering the upwardly revised guidance presented by Allergan last Monday.

Pershing Square said it remain extremely concerned about the approach that the Allergan board has taken with respect to this transaction.

"We believe that it is highly inappropriate for Mr. Pyott to be the "sole" board representative in dealing with shareholders with respect to the Valeant transaction. Rather, we believe that the independent directors should engage directly with shareholders without management present," Ackman said.

Ackman asked that the company immediately repair its governance failures and establish a subcommittee of independent directors of the board that can respond to shareholder requests for open communication and in-person meetings.

In April, Valeant announced that it submitted a merger proposal to acquire Allergan for $48.30 in cash and 0.83 Shares of Valeant stock for each Allergan share. The offer valued Allergan at around $46 billion.

Last week, Botox maker Allergan rejected an unsolicited proposal from Canadian drug maker Valeant Pharmaceuticals International.