Orange County Business Journal

Allergan Board Stands By Pyott, Refutes Ackman

Vita Reed Tuesday, May 20, 2014

Irvine-based Allergan Inc. on Monday fired back at activist investor Bill Ackman in a tersely worded letter prompted by Ackman’s conflict of interest charges against Chairman and Chief Executive David Pyott.

Ackman, whose Pershing Square Capital Management LP owns 10% of the Botox maker, is backing a hostile $47 billion bid for Allergan by Laval, Quebec-based Valeant Pharmaceuticals International Inc.

Allergan formally rejected that bid last week, saying Valeant’s offer undervalues the company.

Ackman, in today’s letter, suggested that Pyott had a conflict of interest because of his dual roles and called for Allergan’s board to hire independent advisors to evaluate Valeant’s bid.

“The [board] is well aware of its fiduciary duties to all stockholders and is being well-advised by its independent advisors,” Michael Gallagher, Allergan’s lead independent director, said in the response to Ackman.

“That being said, we strongly disagree with your statements and tactics including your blatant attempt to isolate David Pyott, who has created enormous value for the Allergan stockholders and who is keenly focused on the best interests of all stockholders,” Gallagher wrote. He added that the entire board, including Pyott, “is open to all options that will significantly enhance the long-term value of Allergan for all stockholders.”

Allergan also publicized an internal employee memo from Pyott in the same Securities and Exchange Commission filing. Among other things, Pyott said that most of Allergan’s largest investors shared management’s belief that “Valeant’s business model with low organic sales growth, serial acquisitions and cutting of R&D, sales and marketing, and overheads is not sustainable.”