Pershing Square, Valeant Agree To Pay $290 Mln To Settle Allergan Lawsuit

(RTTNews) - Activist investor Bill Ackman's Pershing Square Holdings Ltd. and Valeant Pharmaceuticals International Inc. (VRX, VRX.TO) agreed to pay $290 million to settle investor claims that they engaged in insider trading in the unsuccessful 2014 takeover bid for Botox-maker Allergan Inc.

Pershing Square and Valeant have agreed to split the $290 million total settlement such that Pershing Square will pay $193.75 million and Valeant will pay $96.25 million. While Valeant had originally agreed to pay 60% of the cost of the settlement, Valeant and Pershing Square had different views on the desirability and timing of settling the case, which previously prevented settlement. On December 19, 2017, Pershing Square acquired control of the settlement of the litigation in exchange for agreeing to pay a greater percentage of the settlement amount.

"We continue to believe the case had absolutely no merit," said Pershing Square CEO Bill Ackman. "We decided, however, that it was in the best interest of our investors to settle the case now instead of continuing to spend substantial time and resources pursuing the litigation."

Pershing Square had previously set aside $75 million in legal reserves related to the case. The incremental cost of settling the litigation will reduce PSH's and the private funds' performance and net asset value by 132 basis points.

Separately, Valeant confirmed that it will pay $96.25 million, or 33 percent, of the settlement under the terms of a recently revised Litigation Management Agreement with the other defendants. Additionally, as part of the agreement, the Company and the other defendants admit no wrongdoing.

"We believe this agreement to resolve the legacy litigation is in the best interests of the Company, because it enables us to focus our attention and resources on the transformation of Valeant," said Joseph C. Papa, chairman and CEO, Valeant.

Allergan's shareholders claimed in the lawsuit that they were tricked when Ackman bought their shares with the secret knowledge Valeant was planning a hostile bid. Pershing Square made a paper profit of more than $2 billion on its Allergan investment when Actavis ended up buying the then-Irvine, California-based company, which had rejected Valeant's takeover offers.