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Andrew Ross Sorkin Smells Something Fishy

Late last week, Botox-maker Allergan Inc sued Valeant Pharmaceuticals and Pershing Square, alleging the latter two had engaged in insider trading when Pershing bought $1 billion worth of Allergan shares ahead of a takeover offer by the hedge fund and Valeant. On the suggestion of wrongdoing, Valeant called with charges “baseless,” while Ackman stated in a press release that “This is a shameless attempt by Allergan to delay the shareholders’ fundamental right to call a special meeting and vote their shares. Allergan is threatened by our progress toward calling the special meeting. This scorched-earth approach is further evidence of the board’s and management’s further entrenchment.”

Not entirely convinced? Dealbook‘s Andrew Ross Sorkin, who in his column today says WAIT JUST A SECOND, PEOPLE.

There was no secret phone call or briefcase full of money. Instead, Valeant’s chief executive, J. Michael Pearson, called Mr. Ackman directly and told him about his company’s intent, seeking a partnership of sorts in which Mr. Ackman would build a large position in Allergan stock and help Valeant press Allergan’s board to acquiesce to a deal…Still, something hasn’t smelled right about these clever machinations. An analyst at Sanford C. Bernstein quite rightly titled a report “How Can It Be Legal?” […] Whatever the case, Valeant and Mr. Ackman’s actions, at least from a public policy perspective, may have been too clever by half. When Sanford C. Bernstein wrote a note to clients at the time the offer was first announced, it described Pershing Square as having found an opportunity for “regulatory arbitrage.” Now a judge will decide whether it was truly regulatory arbitrage or something more sinister.

Ackman and Valeant’s Bid for Botox Maker May Be Too Clever to Be Legal [Dealbook]

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21 Responses to “Andrew Ross Sorkin Smells Something Fishy”

  1. Jeff Mackerel says:

    My whole hog stinks to high heaven all in one basket.

  2. Derp says:

    If they didn't have a legal agreement of partnership, isn't this a picture perfect definition of insider trading?

  3. Boris says:

    In Russia, this is perfectly acceptable

  4. Captain Oblivious says:

    Company calls Hedge Fund manager to tell them that they need his help to force someone into a deal no one else knows about? I see no issue.

    Do we really need a federal judge for this?? Judge Joe Brown would have this sewed up in 27 minutes

  5. Narcissus Bellicose says:

    Something tells me that Mr. Ackman has nothing whatsoever to worry about: http://www.campaignmoney.com/political/contributi

  6. Corleone-Levine, CFA says:

    Hmm, maybe Matt's absence this week is because he's been drafted as Pershing Square's interim special counsel for insider trading defense related matters and associated footnotes? Y'know, like a wartime consigliere but with more charts.

  7. William AckAck says:

    Join me next year for the most important presentation of my life, live from Cellblock B, Morgantown FCI, Morgantown, WV

  8. BORF says:

    Here comes the BORF!

  9. Andre Young says:

    HLF must have ratted him out to Sorkin.

  10. guest says:

    would love to see Ackman in the same cell with the CEO of Herbalife

  11. Phil Goldstein says:

    I predict the case will get dismissed (or settled). Allergan has no standing because it was not harmed and because the statute it is suing to enforce does not provide for a private cause of action.