"This is a shameless attempt by Allergan to delay the shareholders' fundamental right to call a special meeting," Ackman said in a statement. "Allergan's determination to waste money on a baseless lawsuit against its largest shareholder further demonstrates why this board of directors should be removed."
Without a shareholder meeting, Pershing Square and Valeant may not have the support they need to remove Allergan's "poison pill," inserted to prevent any hostile takeover.
As the old saying goes, if it quacks like a duck and it looks like a duck it probably is a duck. The Pershing/Valeant deal looks like insider trading. Under current laws it may not be, but that could quickly change.
If Allergan prevails in its suit, Ackman could be looking at yet another hit to his fund and his reputation.
At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
TheStreet Ratings team rates ALLERGAN INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ALLERGAN INC (AGN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, compelling growth in net income and solid stock price performance. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.4%. Since the same quarter one year prior, revenues rose by 16.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.39, which clearly demonstrates the ability to cover short-term cash needs.
- ALLERGAN INC has improved earnings per share by 17.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ALLERGAN INC increased its bottom line by earning $4.20 versus $3.57 in the prior year. This year, the market expects an improvement in earnings ($5.79 versus $4.20).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Pharmaceuticals industry average. The net income increased by 15.9% when compared to the same quarter one year prior, going from $359.90 million to $417.20 million.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 82.02% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: AGN Ratings Report