T. Rowe Price, the second largest shareholder in Allergan Inc (AGN.N), said on Friday that it wants the company to hold off on making major moves before a Dec. 18 special shareholder meeting, and criticized the board on its corporate governance.
The Baltimore-based investment firm is the second Allergan shareholder in two days to criticize the maker of Botox anti-wrinkle injections, which is trying to fend off a hostile, $53.7-billion takeover bid from Valeant Pharmaceuticals International Inc (VRX.TO).
The special meeting was requested by shareholders led by activist Bill Ackman for a vote on replacing most of California-based Allergan's directors. A revamped board might then hold talks with Valeant about its stock and cash offer, which has been championed by Ackman.
Ackman's hedge fund Pershing Square Capital Management is Allergan's largest shareholder.
T. Rowe Price has for several months watched the Allergan board's corporate governance practices with "growing concern," said spokesman Bill Benintende in a statement.
"The issues to be voted on at the special meeting of shareholders on Dec. 18 are of such importance that they impose a special duty on the board to refrain from approving any significant, irreversible commitments by the company between now and then unless shareholders are offered the opportunity to vote on them," Benintende said. "We believe this should apply even in the event of all-cash acquisitions that do not ordinarily require a shareholder vote."
Allergan recently revived discussions to buy Salix Pharmaceuticals Ltd (SLXP.O) in order to fend off Valeant.
An Allergan spokeswoman said in an e-mailed statement the company appreciated the perspectives of its shareholders and the board had a long track record of acting in the best interests of its investors.
"We recognize that what matters is value, and Allergan's board remains confident in the company's ability to deliver significantly more value than Valeant's grossly inadequate offer," the statement said.
T. Rowe Price owned a 5.4 percent stake in Allergan and 4.6 percent of Laval, Quebec-based Valeant as of June 30.
On Thursday, Pentwater Capital Management criticized Allergan for refusing to talk with Valeant or Actavis PLC (ACT.N), another company that has approached Allergan.
Valeant, meanwhile, got a boost on the same day when hedge fund ValueAct Capital said it would return to Valeant's board and that it planned to increase its stake in the company.
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