A California federal court judge on Tuesday handed a win to Bill Ackman's Pershing Square Capital Management LP in its efforts to vote its shares at a special meeting of Allergan Inc. (AGN) shareholders in December regarding the constitution of the Botox maker's board and whether it should engage in talks with Valeant Pharmaceutical International Inc. (VRX) regarding its $54 billion hostile tender offer.
At the same time, the ruling does not cast aside the allegation that Valeant and the activist hedge fund might have violated securities laws when the two teamed up to make their bid for Irvine, Calif.-based Allergan.
Allergan and a co-plaintiff shareholder sued Valeant and Pershing Square in U.S. District Court in California alleging a breach of securities law, the law prohibiting trading on material information about hostile takeovers. The suit claims that Pershing Square, which acquired 9.7% of Allergan shares through a joint venture with Valeant (the Canadian pharmaceutical company made a minor investment in the JV,) after Valeant made steps toward a tender offer. The lawsuit also claims that Pershing Square is not protected as an offering person or co-bidder under the rules.
Judge David Carter decided that while Allergan lacked standing to bring the claim, the co-plaintiff shareholder had the proper standing to bring the suit. The decision also said that the plaintiffs raised serious questions about whether substantial steps were taken to commence a tender offer before the Pershing fund purchased Allergan shares and whether Pershing Square was a co-offerer under the securities law.