ISS urges Allergan to give investors vote, questions credibility

[Anonymous]

http://www.reuters.com/article/2014/10/01/us-allergan-pershingsquare-idUSKCN0HQ44120141001

(Reuters) - Prominent investor shareholder advisory firm ISS called on Allergan Inc. to give its shareholders a chance to vote on any large, buyout-blocking acquisitions and said the company's board faces a credibility problem as it has promised to enhance value for shareholders, according to an ISS report seen by Reuters on Wednesday.

The report comes as the firm's largest shareholder, hedge fund Pershing Square Capital Management, is urging the Botox maker to sell itself to rival Valeant Pharmaceuticals.

Allergan has rebuffed Valeant’s offers and has instead been trying to buy Salix for cash, people familiar with the matter have said. Such an acquisition would make Allergan too big and expensive for Valeant or another buyer.

ISS said Allergan's largest shareholders feel uneasy about the board's stewardship and have felt compelled to say so publicly.

"The credibility question is amplified when a board has demonstrated little interest in other opportunities to enhance shareholder value until it was suddenly face-to-face with an unsolicited premium offer," ISS wrote.

 

[Anonymous]

Everyone on Wall Street wants this deal to happen (fees, commissions, short-term gains).

In contrast, the "stakeholders" (workers, patients, doctors, individual stock owners who are in it for the stock value over the long-term)... want Allergen to find any combination that doesn't involve Valeant and its roll-up short sighted business model of killing R&D, loading up with debt, and trying to raise prices faster than they lose market share in products that are no longer supported or being further developed.

We must stop falling for the buzzword "shareholders" when what these Wall Street articles are really about is professionals only interested in making moves on paper to pump up the short-term value of a stock so they can cash-out and move on to the next money making opportunity (leaving a string of ruined companies in their wake).

 

[Anonymous]

There is WSJ article from 29 Sept, the Dealpolitik column by Ronald Barusch, called "Shareholders May Have Little Influence on Allergan Decision". -

"...Under Delaware corporate law, no shareholder approval is required for an acquistion, and New York Stock Exchange rules only would require such approval if more than 20% of Allergan's shares were being issued. Allergan's board is almost certainly getting advice from its lawyers that it is required to do what is best for shareholders, even if most shareholders disagree with its analysis...Allergan shareholders will still get their chance to vote out a majority of the directors approving a Salix deal, but that will probably be too late to derail a Salix buyout and rescue the Valeant bid for Allergan.

...Ironically, the more shareholders who call on the Allergan directors to stop a Salix deal, the less this looks like director entrenchment. By signing up a deal to buy Salix, the Allergan directors make it look more likely they will be removed in December.

...Assuming Allergan moves forward on the Salix buyout without a shareholder vote and Valeant does not up its bid sufficiently to cause the board to trigger any fiduciary out, the only hope for disrupting the Salix deal would be the litigation that Mr. Ackman has threatened...not an easy task in Delaware, where the law generally allows directors to call the shots in circumstances like this...Assuming the Allergan board goes forward with the Salix deal, the fate of Valeant's bid will likely be in the hands of the court, not Allergan's shareholders."