Billionaire investor William Ackman (pictured above) is in hot water with the Botox maker Allergan that claims his hedge fund, Pershing Square, colluded with Valeant Pharmaceuticals in a hostile takeover bid. Allergan claims the two used fraud and insider trading to further their hostile takeover attempt of the California-based drug company. But Pershing and Valeant say Allergan’s allegations are baseless and an attempt to stall Pershing Square’s efforts to replace six of members of the Allergan board, which has rejected Valeant’s takeover bid. The suit claims that New York-based Pershing Square and Valeant circumvented insider trading laws and violated Securities Exchange Commission rules by quietly working together to mount a $50-billion acquisition bid by Valeant.
Allergan’s determination to waste money on a baseless lawsuit against its largest shareholder further demonstrates why this board of directors should be removed.
William Ackman, CEO of Pershing Square Capital Management
According to the complaint, a fund controlled by Pershing Square purchased 9.7 per cent of Allergan stock and other securities between February and April for more than US$3.2 billion, becoming the drug company’s largest shareholder, without disclosing its relationship with Valeant. Allergan said Pershing Square reaped a US$1.2 billion windfall when Allergan’s shares surged once the takeover offer was announced on April 22, significantly damaging selling shareholders.