And, a version of step 2 just happend:
Bingo.
I was amused, throughout the day, to read various headlines suggesting Allergan is "Buckeling" or "Giving up." I think this filing, win or lose, makes it clear that Allergan still has plenty of fight in it.
Allergan did select a meeting date (one day prior to the last legally allowable day), but then quickly added that they haven't yet verified the validity of the proxy request; and, just in case anyone thinks this verification is a mere formality, made it quite clear that they don't think PS shares should count (and without those shares, no 25%, and no special meeting).
Allergan asked Federal Judge Carter to issue an injunction against PS from voting or otherwise using his illegally-obtained (according to Allergan) shares and again asked to Expedite the discovery. The injunction is the heavy weapon here. The expedite motion, again, is a sanctimonious pretension that they wouldn't want to hold up the special shareholder meeting in case PS is cleared (when, obviously, they do!). The best Allergan can hope for is that the injunction be granted (knocking PS out of the equation), and the expedite motion is denied (keeping him knocked out, potentially, for years).
As we are on uncharted legal territory, I can't really handicap this play. My best guess is that the expedite will be denied -- I don't see why Judge Carter will think differently this week than he did last week. The big question is if the Injunction will be granted. If it is, this would be a huge, possibly terminal, setback for PS (Valeant may try to press forward, but without PS it would be mighty difficult). More likely, judge Carter will look for a way to temporize (judges love to temporize, particularly in fast moving situations, since whatever they are being asked to rule on may be rendered moot while they temporize; saving them the need to rule, risk being successfully appealed, and created needless precedents). {You can bet that if this happens, PS will file one expedite motion after another while Allergan will oppose every one of them -- with both sides, now having switched roles, using each other's prior language in their filings
}.
A temporizing ruling would be something like denying both the expedite and injunction, saying that they defer to the DE Chancery Court to interpret Allergan's bylaws, and leaving the door open to return if the Chancery court is unable to proceed appropriately. This is not hugely different from what Judge Carter said last week. The Wall Street Media, with Ackman cheer-leading and Valeant crowing, will declare this as a 3-out-of-3 win over Allergan, but it will be far from it! (Allergan will keep the pretenses up by appearing to put a brave face on the "loss" and meekly pointing out that the judge didn't give a final "no.").
The DE Chancery, which also loves to temporize, will likely toss the ball back to the Federal Court, for instance, by claiming that they are unable to determine the legality of PS shares as they, being a state court, lack jurisdiction to determine if Federal Insider Trading Laws have been violated (never mind that DE Insider Trading laws -- which the Chancery Court does have jurisdiction over -- are effectively identical; but no one [yet] sued PS for violating DE Insider Trading laws).
This potential ping-pong between the two courts would be just great for Allergan, as it will create delays upon delays, through no fault of Allergan. Since I don't see how either court will allow PS to take over Allergan (and shut down the lawsuit -- mooting justice to the victims) without first resolving the Insider Trading accusation, all those delays are to Allergan's benefit.
Ackman may be a prolific litigator, but uncharted legal territory is not the place to find speed.
Dan.
