Allergan Cuts More Jobs as It Fights Hostile Takeover Attempt

Nancy Crotti

September 15, 2014

2 Min Read
Allergan Cuts More Jobs as It Fights Hostile Takeover Attempt

Botox-maker Allergan filed a notice September 3 with California state officials indicating it will lay off 129 employees on October 31. The company previously announced it would lay off about 1500 workers by the end of the year in another move to thwart the hostile takeover from Pershing Square Capital Management, according to a report in the Orange County Business Journal.

Allergan sniffed at the latest volley by Pershing Square Capital Management to stage a hostile takeover of the company.

Allergan called Pershing's delivery last week of requests by 1.5% of Allergan stockholders for a special meeting to vote on the takeover "not a meaningful development." Pershing had delivered requests by 2.8% of Allergan's stockholders on September 3, the company said. Allergan said it had already scheduled a special meeting for stockholders for December 18.

According to a Wall Street Journal report, Pershing holds a 9.7% stake in Allergan, and 35% of Allergan's shareholders already support having the special meeting. Allergan's bylaws require only 25% of its shareholders to request a special meeting, the newspaper said.

Despite the nonchalant response last week, Allergan is seeking legal relief from the hostile takeover attempt, which also includes Pershing hedge fund manager William Ackman and Valeant Pharmaceuticals International, Inc.

"The lawsuit in California is seeking an order barring Valeant, Pershing Square, Mr. Ackman, and entities affiliated with them from voting shares that Allergan believes were acquired in violation of the federal securities laws, including insider trading," Allergan said in its statement. "If Allergan's motion for a preliminary injunction is granted, it would prevent Valeant, Pershing Square, and Mr. Ackman from voting their shares at any meeting of stockholders."

If a federal judge finds that Valeant, Pershing Square and Ackman have violated securities law, the shareholder vote could be delayed, the newspaper said. On August 1, Allergan filed a lawsuit in the U.S. District Court in California claiming that Valeant, Pershing Square and Ackman, violated federal securities laws that prohibit insider trading, engage in fraudulent practices and fail to disclose legally required information, according to Healio.com. Pershing said Friday that more than 25% of Allergan's shareholders would support the meeting even if its stake wasn't included in the total.

Valeant, which is known for running acquisitions in a manner that maximizes immediate profit-making potential at the expense of R&D and future product development, had offered about $53 billion for the maker of Botox and other lesser known drugs, according to a previous Qmed report.

Nancy Crotti is a contributor to Qmed and MPMN.

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About the Author(s)

Nancy Crotti

Nancy Crotti is a frequent contributor to MD+DI. Reach her at [email protected].

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