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Valeant, Ackman get October 6 trial over Allergan special meeting

By Tom Hals
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William Ackman, founder and CEO of hedge fund Pershing Square Capital Management, speaks to the audience about Herbalife company in New York

William Ackman, founder and CEO of hedge fund Pershing Square Capital Management, speaks to the audience about Herbalife company in New York, July 22, 2014. REUTERS/Eduardo Munoz

By Tom Hals

WILMINGTON Del. (Reuters) - Valeant Pharmaceuticals International Inc and activist investor William Ackman got their request for an expedited trial on Wednesday over the timing of a special meeting of Allergan Inc shareholders, a key to their $50 billion hostile takeover fight.

Delaware Court of Chancery Chancellor Andre Bouchard ordered a three-day trial to begin on Oct. 6. That start date is in line with their request for the court to order Allergan - after the trial ends - to call a special meeting by mid-November.

That is about a month earlier than the Dec. 18 date when Allergan has said it will hold the meeting at which Ackman and Valeant hope to elect new board members and open discussions on a deal.

The court order comes after Ackman's Pershing Square Capital Management hedge fund and Canada's Valeant sued the maker of Botox anti-wrinkle treatment on Friday, saying the company did not intend to call a meeting at all. Allergan subsequently set the meeting date.

In the lawsuit, Pershing Square, Allergan's biggest shareholder, alleged that Allergan was trying to avoid a special meeting to give it time to find an alternative deal.

In setting the expedited trial date, Bouchard said it was pretty apparent to him that "Allergan may not want a special meeting at all."

Since Valeant and Pershing Square offered to buy Allergan on April 22, Allergan has consistently rejected the offer, saying it undervalues the company. It has also announced a series of cost cuts and said it was looking for acquisitions as it seeks to persuade shareholders they are better off if it stands alone.

Allergan's lawyer told Bouchard on Wednesday that it needed time to avoid a "bum rush" by Pershing Square and to determine if Pershing Square had violated federal securities laws in obtaining its 9.7 percent stake.

Ackman began accumulating his stake in February when it and Valeant started talking about buying Allergan together. He disclosed his stake on April 21, and the companies announced the offer on April 22, which instantly pushed Allergan shares higher and created $1 billion in paper gains for Ackman.

Allergan has sued both Ackman and Valeant for insider trading in federal court in California, saying that aspects of their unusual arrangement violated securities regulations.

Valeant shares fell $1.12, or less than 1 percent, to $115.98 and Allergan fell $1.59, or less than 1 percent, to $162.38.

(Reporting by Tom Hals, additional reporting by Caroline Humer in New York; Editing by Lisa Von Ahn and Jonathan Oatis)