- The Wall Street Journal reports that the U.S. Securities and Exchange Commission (SEC) has launched a civil probe into Valeant Pharmaceuticals and Bill Ackman-owned Pershing Square's hostile takeover bid for botox-maker Allergan.
- Allergan filed a federal lawsuit against Valeant, Pershing Square, and Ackman on August 1 for insider training. It alleges that Ackman and Pershing took advantage of their access to non-public information and bought Allergan stock before the takeover bid was announced, depriving shareholders an opportunity to profit off of rising stock prices after the offer became public.
- Many SEC probes do not result in any legal ramifications. Sources told the WSJ that the civil investigation is still in its early stages.
Valeant and Pershing Square -- which owns just under 10% of Allergan's stock -- has consistently argued that there is nothing illegal about the companies' joint takeover bid for Allergan. Valeant has offered as much as $53 billion, or $173.24 per share, for Allergan -- a figure that the Botox maker says is much too low. The federal lawsuit filed by Allergan at the beginning of the month may be an attempt to put pressure on Valeant and raise its asking price.
As the Wall Street Journal notes, an SEC probe does not foretell future regulatory action or charges. Rather, this is likely a reaction to the unusual and aggressive tack that Ackman and Valeant have taken during their pursuit of Allergan.