Botox maker Allergan Inc. is reviewing shareholder requests for a special meeting to consider replacing most of its board, a change fellow drugmaker Valeant Pharmaceuticals International Inc. is seeking as part of the hostile takeover attempt it's been waging since April.
Allergan has repeatedly rejected Valeant's offers to buy the company, the latest for about $53 billion in cash and stock, saying Valeant is substantially undervaluing the company and that an independent Allergan can generate more value for shareholders.
Valeant and its partner — investment fund manager Pershing Square Capital Management LP — said late Friday they had submitted to Allergan written requests for a special shareholders meeting from holders of 31 percent of Allergan's stock. That exceeds the level Allergan's bylaws require, Pershing Square said.
Allergan, based in Irvine, said that it will announce details on a possible meeting once it finishes reviewing the requests. Valeant, one of Canada's largest pharmaceutical companies, said Friday that under Allergan's bylaws, it believes Allergan must hold that meeting by Dec. 20.
Allergan, which sells heavily advertised dry-eye drug Restasis, has taken multiple steps to block a takeover, including adopting a "poison pill" measure right after Valeant's first bid.
The pill, also known as a shareholder rights measure, would give Allergan stockholders one "right" per share owned to buy Allergan shares at a discount if anyone acquires 10 percent of the company's stock. Pershing Square is Allergan's biggest stockholder with about 9.7 percent of shares.
A month ago, as Allergan reported its second-quarter earnings jumped 16 percent, it announced a restructuring plan. The company plans to cut about 13 percent of its workforce — around 1,500 employees and 250 vacant positions — to boost efficiency and produce pretax savings of about $475 million in 2015.
Three weeks ago, Allergan sued Valeant, Pershing and Pershing's founder and principal, activist investor William Ackman, accusing them of securities irregularities, claims the Botox maker, fund manager and Ackman call "baseless."
The lawsuit alleges debt-laden Valeant got Pershing Square to finance the deal because it couldn't on its own, and that between February and April, Pershing Square quietly bought $3.2 billion in Allergan shares. The suit states Pershing Square then reaped a windfall after Valeant publicly proposed buying Allergan in late April, as those shares rose about $1.2 billion in value.
Valeant has been urging Allergan shareholders to tender their shares, recently extending its deadline to Dec. 31, and has proposed a slate of six "independent" people for Allergan's nine-member board who would support Valeant's deal.
If Allergan shareholders replace six current board members, a court could then decide to appoint Valeant's slate as new Allergan directors. Valeant and Pershing Square would then gain control of Allergan.
Pershing Square said it expects to deliver more requests for a special meeting from other Allergan shareholders.
Valeant, headquartered in Laval, Quebec, has grown rapidly by buying up more than 100 smaller drug companies since 2008.