In 2014, Valeant Pharmaceuticals, in cooperation with one of William Ackman’s Pershing Square funds, launched an ultimately unsuccessful tender offer to take over Allergan, Inc. In December 2014, Valeant and its CEO, Michael Pearson, together with Ackman and several Pershing Square entities, were named as defendants in a private class action lawsuit that seeks to recover damages from them on behalf of Allergan shareholders who sold Allergan stock while the tender offer was pending. The suit claims that, in violation of federal tender offer rules, the defendants failed to disclose material information about the Allergan tender offer while the Pershing Square fund was acquiring a substantial position in Allergan. The court recently ruled on the defendants’ motion to dismiss the complaint. This article summarizes the key factual allegations and legal claims in the plaintiffs’ complaint and the court’s reasoning. Separately, Allergan had commenced an action against Valeant and the other defendants to challenge the takeover. That action became moot when Valeant withdrew its bid. For more on the Allergan-Valeant litigation, see “Top SEC Officials, Law Firm Partners and In-House Counsel Discuss Private Fund Enforcement Priorities, Tender Offer Rules Applicable to Activist Investing, Valuation Challenges, Personal Trade Monitoring and Compliance Testing (Part Four of Four)
,” Hedge Fund Law Report, Vol. 8, No. 3 (Jan. 22, 2015); and “Did Pershing Square and Valeant Violate Insider Trading, Antitrust or Tender Offer Rules in Their Pursuit of Allergan?
,” Hedge Fund Law Report, Vol. 7, No. 17 (May 2, 2014).