T Rowe Price Calls for Meeting- Urges Shareholder Vote

[Anonymous]

September 26, 2014, 2:40 P.M. ET
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T.Rowe Calls For Shareholder Vote On Allergan’s Plans Too



By Teresa Rivas

Late Thursday, Pentwater Capital Management publicly denounced Allergan’s (AGN) potential acquisition of Salix Pharmaceuticals (SLXP) without a shareholder vote. The firm joins activist investor Bill Ackman, who has also threatened a lawsuit if Allergan doesn’t give shareholders a voice about acquisition, which he opposes, preferring instead to have Allergan bought by Valeant Pharmaceuticals (VRX).

Now T. Rowe Price (TROW) is also coming out against the move. In a statement released this afternoon the firm said it has been watching the actions of Allergan’s board “with growing concern”:


In our view, the issues to be voted on at the special meeting of shareholders on December 18 are of such importance that they impose a special duty on the Board to refrain from approving any significant, irreversible commitments by the company between now and then unless shareholders are offered the opportunity to vote on them. We believe this should apply even in the event of all-cash acquisitions that do not ordinarily require a shareholder vote.

Although Salix isn’t named, presumably the “any significant, irreversible commitments” language likely refers to the firm, as Allergan was said to be planning an all-cash offer.

 

[Anonymous]

I have completely blown the other statements like this off. But I'm not going to lie- this concerns me.

 

[Anonymous]

I have completely blown the other statements like this off. But I'm not going to lie- this concerns me.

The 39% of shareholders bothered to complete all that paperwork for a special meeting didn't do it to just praise Pyott. They want full consideration of bids from Valeant, Actavis, etc.

 

[Anonymous]

September 26, 2014, 2:40 P.M. ET
.
T.Rowe Calls For Shareholder Vote On Allergan’s Plans Too



By Teresa Rivas

Late Thursday, Pentwater Capital Management publicly denounced Allergan’s (AGN) potential acquisition of Salix Pharmaceuticals (SLXP) without a shareholder vote. The firm joins activist investor Bill Ackman, who has also threatened a lawsuit if Allergan doesn’t give shareholders a voice about acquisition, which he opposes, preferring instead to have Allergan bought by Valeant Pharmaceuticals (VRX).

Now T. Rowe Price (TROW) is also coming out against the move. In a statement released this afternoon the firm said it has been watching the actions of Allergan’s board “with growing concern”:


In our view, the issues to be voted on at the special meeting of shareholders on December 18 are of such importance that they impose a special duty on the Board to refrain from approving any significant, irreversible commitments by the company between now and then unless shareholders are offered the opportunity to vote on them. We believe this should apply even in the event of all-cash acquisitions that do not ordinarily require a shareholder vote.

Although Salix isn’t named, presumably the “any significant, irreversible commitments” language likely refers to the firm, as Allergan was said to be planning an all-cash offer.

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Allergan Inc. (AGN)’s third-largest shareholder, T. Rowe Price Group Inc. (TROW), said it is concerned about the drugmaker’s governance and urged that any deal affecting a proposed acquisition by Valeant Pharmaceuticals International Inc. (VRX) be put to a vote of investors.

Allergan, the maker of the anti-wrinkle treatment Botox, was said to be in talks to buy Salix Pharmaceuticals Ltd. in an effort to fend off Valeant’s hostile takeover. T. Rowe said the board shouldn’t move forward with any acquisition, even all-cash deals that normally don’t require a vote, without shareholder approval. Allergan’s shareholders are scheduled to meet Dec. 18 as part of Valeant’s effort to take over the company.

“Over the past several months, we have been watching with growing concern the corporate governance practices of the Allergan board,” T. Rowe spokesman Bill Benintende said in a statement. “The issues to be voted on at the special meeting of shareholders on Dec. 18 are of such importance that they impose a special duty on the board to refrain from approving any significant, irreversible commitments by the company between now and then unless shareholders are offered the opportunity to vote on them.”

Pentwater Capital Management LP, Allergan’s 12th-biggest shareholder with a 1.3 percent stake, also said today that a deal with Salix “has the potential to impede an acquisition of Allergan by Valeant, Actavis, or others” and the board should engage with Valeant or another suitor before seeking an acquisition. Actavis Plc (ACT), which makes generic and brand-name drugs, has been said to have approached Allergan as well.

‘Increasingly Hostile’

“The actions of Allergan’s board have grown increasingly hostile toward its own shareholders,” Pentwater Capital’s Chief Executive Officer Matthew Halbower said in a letter to Allergan’s board.

Allergan, in a statement, said the company appreciates the “perspectives of our stockholders.”

“We recognize that what matters is value, and Allergan’s board remains confident in the company’s ability to deliver significantly more value than Valeant’s grossly inadequate offer,” the Irvine, California-based drugmaker said.

Salix shares fell 2.7 percent to $161.77 at the close in New York. Allergan rose 1.8 percent to $178. Valeant gained 1.2 percent to $128.99.

T. Rowe is a financial services firm that manages $738 billion, according to the Baltimore-based firm’s website.

The companies have fought for months as Allergan has rebuffed all approaches by Laval, Quebec-based Valeant and its partner, investor Bill Ackman’s Pershing Square Capital Management LP. The latest bid from Valeant offered $72 in cash and 0.83 of a Valeant share for each Allergan share.

At the December meeting, Allergan shareholders will have the opportunity to weigh in on issues including requesting that Allergan engage in negotiations with Valeant and Pershing Square and the appointment of an independent slate of directors, Valeant and Pershing said in a Sept. 16 statement.

 

[Anonymous]

T.Rowe has rallied with Bill Ackman from day one on this merger. They want it to happen and in the process they have crossed the line in client discretion and confidentiality with stating their opinions on the matter. I would think that this will effect their client base in the future as they are publicly getting involved in the media by the influence of an activist celebrity.

 

[Anonymous]

T.Rowe has rallied with Bill Ackman from day one on this merger. They want it to happen and in the process they have crossed the line in client discretion and confidentiality with stating their opinions on the matter. I would think that this will effect their client base in the future as they are publicly getting involved in the media by the influence of an activist celebrity.

Agreed. I contacted my IRA/investment manager, Vanguard, with my concerns about the Allergan hostile takeover attempt by Valeant/Pershing Square. Vanguard has significant holdings in Allergan. They gave an acceptable arms length response to me several days later. I posted part of their communication to me on the "Pentwater Capital Management Letter to BOD" thread on the Allergan board, post#22. Their communications as a fiduciary are conducted privately through "direct dialogue with company officials and board members" and "engagement Vanguard has with any company are not disclosed publically".

 

[Anonymous]

T Rowe Price owns 5% of Valeant. Their investment in Valeant was much bigger than their investment in Allergan until Q2. In Q2 T. Rowe Price added more than 8 million Allergan shares.

Even if Allergan is sold at $10 per share to Valeant, T Rowe Price will be fine.