SEC Reviewing Attempted Takeover of Botox Maker Allergan

The Securities and Exchange Commission is looking into the way that a Canadian pharmaceutical company and activist investor Bill Ackman have tried to buy Botox maker Allergan Inc. of Irvine, Calif.

Ackman’s hedge fund, Pershing Square Capital Management, said in an emailed statement Thursday that it has done nothing wrong in its effort to acquire Allergan.

“We welcome the SEC’s review of the facts,” Pershing Square said.

Last week, Allergan sued Valeant Pharmaceuticals International Inc. and Pershing Square, contending that the hedge fund violated securities laws by buying nearly 10 percent of its stock before announcing the attempted acquisition.

SEC spokeswoman Florence Harmon declined comment. It is common for the agency to review complex financial transactions without taking action.

Allergan also declined to discuss the investigation.

In its lawsuit, Allergan alleged that Pershing Square committed insider trading by buying Allergan’s stock without disclosing it was working with Valeant in an attempt to acquire the company. Valeant and Pershing Square made their first bid for Allergan on April 22, causing Allergan shares to skyrocket — and adding millions of dollars of value to Pershing Square’s investment in the company.

Ackman has insisted that the deal did not violate securities laws.

“Valeant and Pershing Square formed a partnership in February and acquired a toehold position in Allergan before an offer was made to acquire the company in a merger transaction,” Pershing Square said in Thursday’s statement. “There is nothing illegal, unethical, or improper in taking a toehold position before a merger is proposed, even if it is not wanted by the target’s management.”

Allergan has rejected three offers for the company from Valeant. Pershing Square has said it will schedule a special meeting of Allergan shareholders to replace several members of its board of directors with members who support the acquisition. The meeting has not yet been scheduled.