Pershing Square, Valeant Agree to Pay $290 Million in Settlement; Judge Will Decide Whether Deal is Fair

January 5, 2018: By Jon Swedien

Legal issuePershing Square and Valeant Pharmaceuticals have agreed to pay $290 million to settle a lawsuit accusing the companies of insider trading before making a bid to buy Allergan in 2014, both companies announced in late December 2017.

However, a federal judge still must approve the deal.

US District Judge David Carter has questioned the proposed settlement, saying he has “substantial questions whether the settlement amount is reasonable and fair.” Carter set a hearing for Jan. 16 for attorneys from both corporations and the plaintiffs to explain their positions on the deal, according to media reports.

Both companies have said they are not guilty of the insider trading charges brought on behalf of investors who sold Allergan shares in the two months before the companies’ unsolicited $51 billion bid for Allergan.

Pershing Square CEO Bill Ackman and Valeant CEO Joseph Papa—who took the position in 2016 after the alleged insider trading—both said the settlement was in their companies’ best interest because it would allow them to move on.

Under the proposed settlement, Pershing Square will pay about two-thirds of the settlement, or $193.75 million. Valeant will pay about a third, or $96.25 million.

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