US - A Pennsylvania pension fund has accused officials at Cephalon of "failing to act" in the best interests of investors regarding a $5.7bn buyout bid by rival Valeant Pharmaceuticals International.
Cephalon, a maker of sleep and pain drugs, said yesterday that it will consider the bid next week. In its complaint, the pension fund claimed the company has been shortchanging shareholders by not considering the $73-a-share hostile offer.
The company's directors are "failing to act in the interest of Cephalon stockholders" by turning away repeated offers by the Canadian drugmaker, lawyers for the Dauphin County pension plan said in a Delaware Chancery Court suit filed yesterday in Wilmington. "The company and its board of directors have repeatedly refused duly to consider acquisition proposals from Valeant."
Cephalon, based in Frazier, Pennsylvania, surged more than 28% on March 30 in Nasdaq Stock Market trading after Mississauga, Ontario-based Valeant made its cash offer public. The acquisition would be the largest hostile takeover in the industry since Sanofi-Aventis SA bid for Genzyme Corp. last year. Cephalon rose 64 cents to $76.08 in trading yesterday. The shares have climbed more than 23% this year.
"Our board of directors will meet early next week to consider Valeant's proposal," Natalie de Vane, a Cephalon spokeswoman, said yesterday in a phone interview.
Cassandra Bujarski, a spokeswoman for Valeant, didn't immediately return a call seeking comment on the suit or the statement by Cephalon.
Valeant, which merged in 2010 with Biovail Corp., said on Feb. 1 that it would buy Zug, Switzerland-based PharmaSwiss SA for $480m to expand in Europe. In January, Valeant Chief Executive Officer J. Michael Pearson said the company would seek acquisitions to broaden its markets globally.
After Cephalon executives turned back several private approaches, Valeant officials said they would seek to replace Cephalon's board with their own nominees, the drugmaker said in a statement.
The fund wants a Delaware judge to force Cephalon's board to consider Valeant's offer and bar use of the company's so- called poison-pill defense to frustrate the buyout bid, according to the lawsuit. That defense makes acquisitions more expensive.
In February, Radnor, Pennsylvania-based Airgas Inc. used a similar defense to fend off a hostile offer from Air Products & Chemicals.
The case is County of Dauphin Retirement Plan v. Winger, CA NO. 6332, Delaware Chancery Court (Wilmington).
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