LAVAL, Quebec and NEW YORK, Aug. 6, 2014 (Canada NewsWire via COMTEX) -- Valeant Pharmaceuticals International, Inc. ("Valeant") VRX +0.03% CA:VRX -1.05% and Pershing Square Capital Management, L.P. ("Pershing Square") today commented on Institutional Shareholder Services' ("ISS") recommendation in support of Pershing Square's effort to call a special meeting of Allergan shareholders. Pershing Square is seeking to call a special meeting to address a number of important matters, including the removal of six incumbent directors from the Allergan Board, which has failed to do any reasonable investigation of the Valeant offer.
ISS has recommended that shareholders of Allergan, Inc. AGN -0.05% PROVIDE CONSENT and complete and return all necessary documents required to call a special meeting of Allergan shareholders. Earlier this week, Glass Lewis also supported Pershing Square's effort to call a special meeting.
In its report, ISS commented on Valeant's and Allergan's business models and track records:
"Many of the initiatives [Allergan] has announced, moreover--reducing R&D and SG&A expense, looking at acquisitions--are strategies Valeant has used to enormous success over the tenure of its current CEO. This suggests both that there is merit in these business strategies, if Allergan can choose as wisely and execute as well and as boldly as Valeant --and also, perhaps, that Allergan's relentless criticism of the Valeant business model is rooted less in the conviction Valeant's model is dangerously flawed than in the conviction anything outside of the defensive perimeter should be scorched."*
In addition, ISS criticized Allergan's bylaw provisions:
"As a response to the deeper question of why Allergan's bylaw constraints were an appropriate response to the shareholder mandate to provide certain governance rights, by contrast, it appears to have been an exercise in concealing what was never worth finding: the Allergan bylaws are far more restrictive than any of the comparator companies the board apparently reviewed, with no discernable advantage for Allergan shareholders. … The risk from which these bylaws "protect" shareholders, to put it bluntly, is the risk that they will be treated as owners, and asked to make serious and important decisions about the future of their company."
"We are pleased that ISS, along with Glass Lewis, has affirmed that Allergan shareholders deserve the opportunity to have their voices heard and support a special meeting of Allergan shareholders," said Bill Ackman, CEO of Pershing Square. "The ISS Report should cause Allergan shareholders to question the credibility of a Board that is pursuing frivolous litigation tactics and baseless attacks to delay or stop the right for shareholders to fix anti-shareholder bylaws, elect shareholder-friendly directors and to voice their concerns about Allergan's poor corporate governance. The board's approach to the Special Meeting is consistent with how they have handled the Valeant offer - the board continues to ignore its fiduciary responsibilities to engage with Valeant and properly analyze and consider the benefits and shareholder value that can be created by the potential business combination as well as other alternatives."
J. Michael Pearson, Valeant chairman and chief executive officer, commented, "Our offer represents a significant premium to Allergan's unaffected stock price, and shareholders should have the right to determine for themselves whether they want to pursue this enormously value-creating transaction. Given the Allergan board's repeated refusal to engage in good faith negotiations with Valeant, their 'scorched earth' campaign of unjustified attacks on Valeant's business and their efforts to prevent Allergan shareholders from voicing their perspectives on our offer, we believe that the only path forward is to replace a majority of the Allergan board, remove Allergan's anti-shareholder governance provisions and allow investors the opportunity to decide the outcome of this transaction. Valeant remains committed to pursuing this compelling transaction, which will create an unrivaled platform for growth and value creation in healthcare."
It looks like ISS was pretty blunt about the AGN Board. This is getting exciting....I got my popcorn.
ISS has recommended that shareholders of Allergan, Inc. AGN -0.05% PROVIDE CONSENT and complete and return all necessary documents required to call a special meeting of Allergan shareholders. Earlier this week, Glass Lewis also supported Pershing Square's effort to call a special meeting.
In its report, ISS commented on Valeant's and Allergan's business models and track records:
"Many of the initiatives [Allergan] has announced, moreover--reducing R&D and SG&A expense, looking at acquisitions--are strategies Valeant has used to enormous success over the tenure of its current CEO. This suggests both that there is merit in these business strategies, if Allergan can choose as wisely and execute as well and as boldly as Valeant --and also, perhaps, that Allergan's relentless criticism of the Valeant business model is rooted less in the conviction Valeant's model is dangerously flawed than in the conviction anything outside of the defensive perimeter should be scorched."*
In addition, ISS criticized Allergan's bylaw provisions:
"As a response to the deeper question of why Allergan's bylaw constraints were an appropriate response to the shareholder mandate to provide certain governance rights, by contrast, it appears to have been an exercise in concealing what was never worth finding: the Allergan bylaws are far more restrictive than any of the comparator companies the board apparently reviewed, with no discernable advantage for Allergan shareholders. … The risk from which these bylaws "protect" shareholders, to put it bluntly, is the risk that they will be treated as owners, and asked to make serious and important decisions about the future of their company."
"We are pleased that ISS, along with Glass Lewis, has affirmed that Allergan shareholders deserve the opportunity to have their voices heard and support a special meeting of Allergan shareholders," said Bill Ackman, CEO of Pershing Square. "The ISS Report should cause Allergan shareholders to question the credibility of a Board that is pursuing frivolous litigation tactics and baseless attacks to delay or stop the right for shareholders to fix anti-shareholder bylaws, elect shareholder-friendly directors and to voice their concerns about Allergan's poor corporate governance. The board's approach to the Special Meeting is consistent with how they have handled the Valeant offer - the board continues to ignore its fiduciary responsibilities to engage with Valeant and properly analyze and consider the benefits and shareholder value that can be created by the potential business combination as well as other alternatives."
J. Michael Pearson, Valeant chairman and chief executive officer, commented, "Our offer represents a significant premium to Allergan's unaffected stock price, and shareholders should have the right to determine for themselves whether they want to pursue this enormously value-creating transaction. Given the Allergan board's repeated refusal to engage in good faith negotiations with Valeant, their 'scorched earth' campaign of unjustified attacks on Valeant's business and their efforts to prevent Allergan shareholders from voicing their perspectives on our offer, we believe that the only path forward is to replace a majority of the Allergan board, remove Allergan's anti-shareholder governance provisions and allow investors the opportunity to decide the outcome of this transaction. Valeant remains committed to pursuing this compelling transaction, which will create an unrivaled platform for growth and value creation in healthcare."
It looks like ISS was pretty blunt about the AGN Board. This is getting exciting....I got my popcorn.