Ackman Threatens To Sue Allergan Over Salix Deal: Reports

(RTTNews) - Activist investor William Ackman has threatened to sue botox maker Allergan Inc. (AGN) if it agrees to a merger deal with Salix Pharmaceuticals Ltd. (SLXP) that does not require shareholder approval, the Wall Street Journal reported on Tuesday citing a letter sent to Allergan board.

According to media reports on Monday, Allergan is said to have been in advanced talks to buy Salix in order to fend off a $53 billion hostile bid from Canada-based Valeant Pharmaceuticals Inc. (VRX, VRX.TO). Allergan's acquisition of Salix for a price of over $10 billion would likely halt a hostile bid for the company from Valeant as the deal would become too big for Valeant.

According to the WSJ report, Will Ackman's Pershing Square Capital Management in the letter said that a merger with Salix will contradict with Allergan's promise to give shareholders a vote on the $53 billion offer.

Allergan could pay for the acquisition of Salix with cash and thus, sidestep the need for a shareholder vote on the deal with Valeant Pharmaceuticals and Pershing Square.

Pershing Square said Allergan's board would be breaching its fiduciary duty to its shareholders if it went along with the Salix acquisition and dropped the Valeant deal.

In April, Valeant along with billionaire investor William Ackman's hedge fund Pershing Square made a hostile bid to acquire Allergan for $46 billion in cash and stock. Pershing Square is the largest shareholder in Allergan with a 9.7 percent stake. However, Allergan's board has rejected the offer.

In May, Valeant sweetened its bid for Allergan to about $53 billion, but the offer was again spurned. Allergan has called Valeant's business model unsustainable and said that a deal with Valeant would hurt its research and development program.

Allergan has agreed to unconditionally call and hold a special meeting of its shareholders on December 18. At the special meeting, Pershing Square plans to rejig the Allergan board and push forward the takeover bid.

AGN is currently trading at $169.35, up $3.23 or 1.94%, on the NYSE.

VRX is currently trading at $116.43, up $0.15 or 0.13%, on the NYSE.