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Ackman 10.20.14 Amended Counterclaims

Ackman 10.20.14 Amended Counterclaims
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  12345678910111213141516171819202122232425262728  AMENDED COUNTERCLAIMS OF VALEANT AND PERSHING SQUARE Mark Holscher (SBN 139582) Michael Shipley (SBN 233674) KIRKLAND & ELLIS LLP 333 South Hope Street Los Angeles, California 90071 Telephone: (213) 680-8400 Facsimile: (213) 680-8500 [Additional counsel on signature page] UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION – SANTA ANA ALLERGAN, INC.,  et al. , Plaintiffs, v. VALEANT PHARMACEUTICALS, INTERNATIONAL, INC., et al. , Defendants. ) ) ) ) ) ) ) ) ) ) ) )   Case No.: 8:14-cv-01214-DOC-(ANx) Honorable David O. Carter AMENDED COUNTERCLAIMS OF VALEANT AND PERSHING SQUARE Case 8:14-cv-01214-DOC-AN Document 190-1 Filed 10/20/14 Page 1 of 45 Page ID #:6932  12345678910111213141516171819202122232425262728 -1- AMENDED COUNTERCLAIMS OF VALEANT AND PERSHING SQUARE INTRODUCTION 1.   In April 2014, Valeant proposed a merger to Allergan at a substantial  premium to Allergan’s share price before the proposal was announced. Allergan and its Board of Directors rejected the proposal, categorically refused to negotiate with Valeant, and embarked on a campaign to prevent its shareholders from deciding for themselves whether to accept the proposal. As Glass Lewis, a leading independent shareholder advisory firm, put it, Allergan is engaging in “obstructive” behavior “more indicative of a board concerned with entrenching its position than seeking to enhance shareholder value.” Allergan even resorted to using in its Complaint a six-line quote from Pershing Square’s William Ackman from a surreptitiously recorded  private conversation on May 13, 2014 with Allergan’s Chairman and CEO, which was tape recorded without Mr. Ackman’s knowledge or consent. 2.   But the scorched earth campaign waged by Allergan and its board went beyond bad corporate governance. And it went far beyond aggressive corporate defense. Allergan disseminated intentionally false and misleading statements in a deliberate campaign to manipulate Valeant’s share price downward and its own share  price upward. This conduct violated multiple provisions of the federal securities laws. 3.   First, Allergan made false and misleading statements in a calculated effort to obstruct Allergan’s shareholders from calling a special meeting of Allergan shareholders, as they are entitled to do under Allergan’s Certificate of Incorporation and Delaware law. At the special meeting, Allergan’s shareholders would decide for themselves whether to remove shareholder-unfriendly directors, eliminate obstructive Bylaws, and request that the Board promptly engage in good faith discussions with Counterclaimants regarding a possible acquisition, including by rescinding various roadblocks Allergan has erected to prevent the pending exchange offer from succeeding. To avoid giving shareholders an opportunity to be heard, Allergan made multiple false and misleading statements in violation of Rule 14(a) of the Exchange Case 8:14-cv-01214-DOC-AN Document 190-1 Filed 10/20/14 Page 2 of 45 Page ID #:6933  12345678910111213141516171819202122232425262728 -2- AMENDED COUNTERCLAIMS OF VALEANT AND PERSHING SQUARE   Act. For example, Allergan claimed that Valeant’s “business model is unsustainable”  based on assertions that Allergan knew to be untrue. And Allergan falsely and  baselessly stated that the consideration in the proposed transaction was “grossly inadequate,” despite the fact that it would provide shareholders a 55 percent premium over the unaffected stock price. 4.   Second, Allergan intentionally used these same misstatements in opposing a pending exchange offer by AGMS, together with its Counterclaimant co- bidders. Allergan schemed to depress Valeant’s stock price, in turn reducing the value of Valeant and Pershing Square’s proposals, fueled by deliberately false statements. 5.   Third, Allergan conducted a highly unusual road show, going to Canada to meet with Valeant’s  shareholders. The meetings could have had no  purpose other than to injure Valeant and depress its share price. This peculiar tactic of seeking to ward off an acquisition proposal by soliciting opposition to the proposal from the acquiror’s shareholders without filing a proxy statement violates the federal securities laws. 6.   Counterclaim Defendants’ misstatements, and their wholly improper attempts to solicit Valeant shareholders, are acts of desperation that reflect flagrant violations of the federal proxy solicitation and tender offer laws and rules set forth in the Exchange Act and the Williams Act and the rules promulgated thereunder by the SEC. Defendants have disseminated false and misleading statements to Allergan shareholders regarding the merits of Pershing Square’s consent solicitation, in violation of Section 14(a) of the Exchange Act, 15 U.S.C. § 78n(a), and Rule 14a-9, 17 C.F.R. § 240.14a-9, and other misinformation and half-truths about Valeant and the merits of Counterclaimants’ ongoing exchange offer, in violation of Section 14(e) of the Williams Act, 15 U.S.C. § 78n(e). Moreover, Allergan has sought improperly to solicit opposition to the proposed transaction from Valeant shareholders while Valeant had a proxy solicitation underway, without submitting a proxy statement or Case 8:14-cv-01214-DOC-AN Document 190-1 Filed 10/20/14 Page 3 of 45 Page ID #:6934  12345678910111213141516171819202122232425262728 -3- AMENDED COUNTERCLAIMS OF VALEANT AND PERSHING SQUARE   complying with the laws and regulations governing such solicitations, in violation of Section 14(a) of the Exchange Act, 15 U.S.C. § 78n(a), and Rule 14a-3, 17 C.F.R. § 240.14a-3. JURISDICTION AND VENUE 7.   This Court has subject matter jurisdiction over this action under 15 U.S.C. §§ 77aa, 77n(a), 77t(a), 78t(a), and 28 U.S.C. § 1331. 8.   This Court has personal jurisdiction over the Counterclaim-Defendants because each of them has sufficient minimum contacts in the State of California to satisfy California’s long-arm statute and constitutional due process requirements. Allergan is headquartered in this District, conducts continuous and systematic business activities here, committed certain of the acts complained of herein in this District, and consented to suit in this Court by filing this action. The Individual Counterclaim Defendants are directors of a company headquartered in this District and directed unlawful activities carried out in this District. 9.   Venue is proper in the United States District Court for the Central District of California pursuant to 15 U.S.C. § 78aa and 28 U.S.C. § 1391(b) and (c). THE PARTIES 10.   Counterclaimant PS Fund 1, LLC (“PS Fund 1”) is a limited liability company formed by and among: Pershing Square Capital Management, L.P., a Delaware Limited Partnership and registered investment advisor; Pershing Square, L.P., a Delaware limited partnership; Pershing Square II, L.P., a Delaware limited  partnership; Pershing Square International, Ltd., a Cayman Islands exempted company; Pershing Square Holdings, Ltd., a Guernsey limited liability company; and Valeant Pharmaceuticals International (“Valeant USA”). PS Fund 1 owns 28,878,538 shares of Allergan stock. 11.   Counterclaimant William Ackman is the founder and CEO of Pershing Square. Mr. Ackman resides in New York. 12.   Counterclaimant Valeant Pharmaceuticals International, Inc. is a Case 8:14-cv-01214-DOC-AN Document 190-1 Filed 10/20/14 Page 4 of 45 Page ID #:6935
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