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Bill Ackman On Good Poison Pills, Bad Poison Pills and Things That Are Definitely Not Front-Running

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Bill Ackman is pretty good at waiting. He waited more than a year for JC Penney to see the light and hire the guy he wanted as CEO, and then another year-and-a-half for that guy to fail spectacularly and saddle him with a half-billion dollar loss. Speaking of half-billion dollar losses, he waited for more than a year for a power that is to start looking into his allegation that there’s something amiss at diet-shake distributor and distributor-recruiter Herbalife, and now he’s patiently waiting for one of them to shut it down.

So he’s happy to wait for a couple of months while the people who make Botox consider their options while protected by a poison pill. Just as long as the option they come down on is selling their company for $46 billion to his chosen buyer, or to someone else for a bunch more.

Ackman told CNBC that Allergan's defensive move does not necessarily make the takeover more difficult. "If I were a director on this board, I would not immediately accept Valeant's proposal. They've hired Goldman Sachs and, I think, BofA. Those banks are going to reach out to other big pharma companies and potential buyers of the business."

"It depends on why the poison pill was put in place. If the poison pill is an entrenchment device then that's a bad thing," he said in comments on CNBC.

"If the poison pill is a way for the board to explore other alternatives and have a reasonable period of time to do that, then that's fine," he said. "I think a pill that is put in place for ninety days, that gives a board a way to look at other alternatives" is reasonable.

He said that part of what he does is compel companies to "do the right thing for shareholders."

"And we have all kinds of ways of making that happen," Mr. Ackman said at an investor presentation in Manhattan on Tuesday that he and Valeant hosted. He later added: "We will do that here, we are committed to doing that here and we have an enormous financial and reputational" investment in making that happen.

Mr. Ackman said that if Valeant's offer were to fall through, Allergan would likely have a very big mess on its hands, with its stock tanking by about $50 and investor lawsuits coming in tow.
It's not where we want to be, it's not where they want to be," he said.

Oh, yea: In case you were wondering, Carl Icahn, he didn’t do anything wrong putting this whole thing together.

He said his lawyer—Robert Khuzami, former director of enforcement at the SEC—vetted the Valeant partnership and deemed it legal.

"The way the rules work is you're actually permitted to trade on inside information ... as long as you didn't receive the information from someone who breached … fiduciary duty or duty of confidentiality, et cetera," Ackman said.

"Valeant basically came to us and said, 'Look, if you can help us buy Allergan we can work with you.' We said, 'Great,' and we formed a partnership," he said. "The partnership has various terms. It gives us the right and permission from the company to go buy a stake in Allergan."

I did not front-run Allergan stock, Ackman says [CNBC]
Ackman: Poison Pill Is Way for Allergan to Explore Alternatives - CNBC [Dow Jones via Nasdaq]
Allergan Adopts Poison Pill [WSJ]
Ackman Warns Allergan Against Saying No to Valeant Offer [WSJ]