WASHINGTON: Allergan Inc, which is fighting a US$51 billion hostile takeover bid from Valeant Pharmaceuticals International and activist investor William Ackman, on Friday filed a federal lawsuit alleging they violated insider trading laws.
The lawsuit alleges that Ackman’s hedge fund, Pershing Square Capital Management, purchased Allergan shares with the knowledge that Valeant planned to launch a tender offer in the months before it made those intentions public.
The value of Pershing Square's Allergan shares jumped $1.2 billion when Valeant announced its initial offer on April 22, 2014, improperly enriching Pershing Square at the expense of shareholders, according to the lawsuit, filed in U.S. District Court for the Central District of California. Allergan asked the court, based in Santa Ana, to rescind Pershing Square's purchase of the Allergan shares it alleges were illegally acquired.
Valeant officials were not immediately available. Neither Ackman nor Pershing Square could not be immediately reached.
The lawsuit said heavily indebted Valeant lacked the resources to buy Allergan, so it sought financing from Ackman and Pershing Capital.
By the time they reached a financing agreement, Valeant had already taken concrete steps toward a tender offer for Allergan, the suit alleged. They included hiring financial and legal advisers and holding numerous board meetings.
A limited liability corporation formed and controlled entirely by Pershing Square then purchased Allergan stock and other securities, without disclosing Valeant's intentions, the complaint said.
The investment vehicle's "rapid accumulation of a total of 9.7 percent of outstanding Allergan stock, while in possession of material nonpublic information" violated insider trading laws, the lawsuit alleges.- Reuters
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