A poison pill is designed to make the transaction being pursued by a hostile bidder extremely unattractive from an economic perspective, compelling the bidder to negotiate with the targets board of. A company targeted for a takeover uses a poison pill strategy to make shares of the. Using shareholder rights plans poison pills to fight. I recommend this book to anyone in search of a great and informative read. A drug used to treat lead poisoning is causing a toxic reaction among hospitals and poison control centers after valeant pharmaceuticals jacked up the price more than 2,700 percent in a single.
Botox maker allergan adopts poison pill in bid to stave. Adopting a poison pill in response to shareholder activism. If the deal is completed, allergan shareholders would own about 43. Named after the cyanide pill that secret government agents are said to be instructed to swallow if capture is imminent. Corporate governance nasty medicine business the economist. The company said it needed time to consider takeover. Recent poison pill developments and trends introduction shareholder rights plans were developed more than 30 years ago to fend off opportunistic hostile offers and other abusive takeover transactions. The proliferation of corporate mergers and acquisitions has spawned. Sothebys may have won its litigation battle with activist investor dan loeb of third point, but loeb won his war with the auction house. And while these contests seldom go the full distance to an actual vote, the potential of this threat is a stick that pershing square and valeant can use to prod allergan. Because the board of directors can cancel the poison pill, potential acquirers seek the agreement of a companys board as an initial step in a. A shareholder rights plan, also known as a poison pill, is one of the most effective defense tactics available to publicly traded corporations.
Studies suggest that firms with poison pills receive a 10% to 20% higher premium from acquiring firms over companies that do not have a poison pill in place. Valeant pharmaceuticals international is a classic case of how wall street clings to. Shares of rival hertz global holdings fell with those of avis. Allergan has a poison pill in place, and has been fighting to stave off valeants takeover bid. I especially enjoyed the history of the pharmaceutical industry that he weaves into his story. Rights plans deter unauthorized stock accumulations by imposing substantial dilution upon any shareholder who acquires. Marcus injects botox into a patients forehead at the offices of marcus facial plastic surgery in redondo beach. Allergan hits back, launches poison pill against hostile valeant takeover. Apr 29, 2014 the poison pill effectively forces pershing square and valeant to run a proxy contest to remove directors and redeem the pill if they want to force allergan into a deal. Nov 05, 2012 under fire from activist investor carl icahn, netflix this morning announced adoption of a poison pill shareholder rights plan. The architect of the antitakeover defense, martin lipton, explained to the deal why he. Dec 01, 2015 however, the inner workings of a dutch poison pill are fundamentally different from an american pill. Martin lipton, the lawyer credited with the creation of the poison pill, has some thoughts on the corporate defenses makeover. Us health care company allergan has adopted poison pill measures in its counter action against the unsolicited offer from canadas valeant pharmaceuticals and activist investor bill ackman.
Bill ackman, valeants hedge fund partner in the allergan transaction. Allergan adopts poison pill defence biopharmadispatch. The oneyear term and 10% max were too lax to begin with. The quirk that bolsters allergans defense the new york times. Zoetis adopts poison pill after ackman takes stake bloomberg. The quirk that bolsters allergans defense the new york. At the same time, valeants share price has continued to decline. Allergan adopts poison pill defense in valeant takeover.
Over the past decade, fewer and fewer public companies have maintained traditionally structured poison pills. Suicide pill, a physical pill for suicide by poison. Apr 05, 2011 if valeant succeeds in replacing cephalons board, its nominees could remove impediments to a potential deal, including a poisonpill provision. And the judges ruling means that ackman and valeant can continue to team up. Apr 23, 2014 us health care company allergan has adopted poison pill measures in its counter action against the unsolicited offer from canadas valeant pharmaceuticals and activist investor bill ackman. In 2001, more than 2,200 corporations had poison pills in effect. What are the best takeoverpoison pillswhite knight stories. Allergans poison pill defence says that if any unapproved investor acquires 10 per cent or more of the companys stock, other stockholders will have the right to buy. Allergan hits back, launches poison pill against hostile.
A poison pill is a tactic utilized by companies to prevent or discourage hostile takeovers. This poison pill aids shareholders the new york times. Activist investor william ackman is looking to take allergan nyse. Allergan board turns down valeant takeover offer local. The legality of poison pill plans was finally called into question in a case that sat before the most important business court in the world, the delaware chancery court. A defensive strategy based on issuing special stock that is used to deter aggressors in corporate takeover attempts. Mylan, a nasdaqquoted dutch public limited liability company or, dutch n. Delaware court poison pill ruling bad for shareholder value. Ackman takes allergan to court to defend against poison pill. Poison pill, a subclass of corporate antitakeover shark repellent to make the corporate target unappealing to an attacker. The poison pill kicks in if an investor acquires 10% or more of netflixs shares or 20% in the case of institutional investors like icahn in a deal not backed by the companys board. Accordingly, make sure you read up on the warning labels about poison pill clauses before you decide to incorporate one into your last will and testament. However, repellent characters, amateurish writing and a loss of focus on the main action make for a missed opportunity. Pershing square, a hedge fund led by shareholder activist bill ackman, has accumulated 9.
Popularly known as corporate raiding, takeovers are hostile mergers intended to acquire a corporation. Shareholder rights plan, also called a poison pill, a subclass of antitakeover. Mead johnson nutritions desire to enact antitakeover provisions may be an exception. A download it once and read it on your kindle device, pc, phones or tablets. Ackman sues allergan over questions about poison pill reuters. Us companies fend off activists with poison pills financial. Nesi thoroughly covers the story of the vioxx drug scandal in a refreshingly honest way. The indianapolis companys board approved a socalled shareholdersrights plan aimed at blocking any individual stockholder from owning more than 12. During the spring and summer of this year, the socalled dutch poison pill made it to the front pages of the business sections of the new york times and the wall street journal. Proxy advisory firms, such as institutional shareholder services inc. Poison pill proves to be a dealbreaker financial times. Nov 05, 2012 the poison pill kicks in if an investor acquires 10% or more of netflixs shares or 20% in the case of institutional investors like icahn in a deal not backed by the companys board.
Apr 23, 2014 the poison pill was a novel legal response to what was considered to be, in 1982, an increasingly hostile landscape for company boards. If valeant succeeds in replacing cephalons board, its nominees could remove impediments to a potential deal, including a poisonpill provision. Nols on the books of a potential target company, it will take a significant amount of. When valeant scheduled a meeting to oust allergan directors, the move was challenged by latham, which drafted bylaws ahead of the hostile bid. Ackmans hedge fund sues botox maker allergan over poison pill. Jan 06, 2011 the poison pill, also known as a shareholder rights plan, is a defensive tactic used by companies to defend against hostile takeovers. Allergan adopts poison pill to stall valeant bid the. Ethical conflicts in the recommendation of poison pills. Selecticas nol poison pill was designed to protect its nol. Allergan has adopted a poison pill to fend off the hostile takeover by valeant and bill ackmans pershing square capital. Among the best defensive mechanisms for companies who are being unwontedly pursued by acquiring companies on the prowl is the colorfully but. Car rental company avis budget group warned of headwinds in 2018 and adopted a poison pill to stymie an activist shareholder. Allergan adopts poison pill defense in valeant takeover bid dr.
Shareholders will receive one preferred stock purchase right as a dividend for each common share held as of the close of business feb. Shortly after canadas valeant and activist investor bill ackman made their offer public last month, allergan announced a socalled poison pill plan, a defensive tactic that makes a buyout. Doctors have toxic reaction to valeant pricing for a. The poison pill effectively forces pershing square and valeant to run a proxy contest to remove directors and redeem the pill if they want to force allergan into a deal. Poison pills, or provisions to thwart takeovers, usually benefit management rather than shareholders. On friday, vicechancellor donald parsons of delaware chancery court denied motions by loeb and pension fund investors to block sothebys from convening its annual shareholder meeting on may 6. Oct 11, 2016 a drug used to treat lead poisoning is causing a toxic reaction among hospitals and poison control centers after valeant pharmaceuticals jacked up the price more than 2,700 percent in a single. The company didnt provide details about the accumulation, and a. What are some great books chronicling hostile takeovers of.
In 2014, pharmaceutical company allergan used its poison pill to ward off bidder valeant long enough to negotiate an acquisition by actavis. Disadvantages of the poison pill although poison pills provide a number of benefits to corporations and investors, they can also be risky. Ackman and valeant pharmaceuticals international vrx. The untold story of the vioxx drug scandal i couldnt put this book down. Valeant dangled the prospect of a higher price if it were allowed to more closely examine cephalons books. The poison pill, also known as a shareholder rights plan, is a defensive tactic used by companies to defend against hostile takeovers. Feb 16, 2011 the legality of poison pill plans was finally called into question in a case that sat before the most important business court in the world, the delaware chancery court. The poison pill is a defensive strategy used against corporate takeovers. There is a double meaning here as the drug company set up for takeover is forced to recall all of their most popular medication when it causes several deaths. It is supplied by valeant pharmaceuticals inc bontril slow release is used in the treatment of obesity and belongs to the drug classes anorexiants, cns stimulants. Using shareholder rights plans poison pills to fight takeovers. Allergan adopted a oneyear shareholder rights plan, often called a poison pill, on april 22, the day valeant and ackman made their offer. This may confront firms with ethical conflicts of interests.
Parsons held that the auction houses board legitimately. Ackman sues allergan over questions about poison pill. Agn to court to ensure that the company wont activate its poison pill when prospective acquirer valeant pharmaceuticals. Poison pills are supposed to stop investors from doing this sort of thing i. Valeant bontril 105 bontril slow release 105 mg generic name. Use features like bookmarks, note taking and highlighting while reading poison pill. Jan 16, 2018 car rental company avis budget group warned of headwinds in 2018 and adopted a poison pill to stymie an activist shareholder. Valeant pharmaceuticals international says three of its directors will not stand for reelection this year as it pursues the acquisition of botox maker allergan, which has adopted a poison pill.
May 05, 2014 sothebys may have won its litigation battle with activist investor dan loeb of third point, but loeb won his war with the auction house. Nov 06, 2014 poison pills are supposed to stop investors from doing this sort of thing i. The original poison pill was instituted last summeras the company began to undo the turnaround plan started by shortterm ceo ron johnson. Poison pill antitakeover device that gives a prospective acquirees shareholders the right to buy shares of the firm or shares of anyone who acquires the firm at a deep discount to their fair market value. A shareholder rights plan, colloquially known as a poison pill, is a type of defensive tactic used by a corporations board of directors against a takeover in the field of mergers and acquisitions, shareholder rights plans were devised in the early 1980s as a way to prevent takeover bidders from negotiating a price for sale of shares directly with shareholders, and instead forcing the. Final thoughts on poison pill clauses poison pill clauses are full of nuances and potential unintended consequencesand on top of that, this area of law is constantly changing. Investors in sprout, the female libido pill maker bought by valeant pharmaceuticals international inc. Under fire from activist investor carl icahn, netflix this morning announced adoption of a poison pill shareholder rights plan. Highlights versata enterprises triggered selecticas poison pill in december 2008, becoming the first stockholder to have intentionally swallowed a modern poison pill. While valeant has been trying to drum up shareholder support for its bid for allergan, the target has been relatively quiet beyond its initial rejection and poison pill efforts. Allergan, the maker of botox, has adopted a poison pill defense to delay a takeover by valeant pharmaceuticals and activist investor bill ackman. Botox maker allergan adopts poison pill in bid to stave off valeant, ackman takeover. The poison pill allows current shareholders to buy more shares at a massive discount, which would increase the cost of an acquisition. Lessons from the first triggering of a modern poison pill.
The company said the plan is intended to protect netflix and its. Valeant ceo disappointed in allergan poison pill cnbc. The poison pill was a novel legal response to what was considered to be, in 1982, an increasingly hostile landscape for company boards. Allergan adopts poison pill in wake of valeant bid the.
Fuelled by the growing investor enthusiasm for junk. Botox maker allergan adopts poison pill in bid to stave off valeant, ackman takeover late tuesday, allergan adopts a shareholder rights plan that will trigger if a person or group acquires 10% or. Since valeant and pershing square announced their bid for allergan, shares in. In the dutch poison pill the option to subscribe for preferred stock at a much lower pershare price than the market price for the ordinary shares is typically granted to a dutch foundation stichting, 4 rather than to the companys. The dutch poison pill received this extraordinary attention because of its use by mylan n. Poison pill amendment or wrecking amendment, an addition to a legislative bill that renders it ineffective. Jun, 2014 allergan adopted a oneyear shareholder rights plan, often called a poison pill, on april 22, the day valeant and ackman made their offer.