Published on April 23, 2014 | by LawNews
Prof. Ronald Colombo Comments in WSJ Story on Activist Investor Ackman’s, Valeant’s Bid for Allergan
In Botox Alliance, Ackman and Valeant Navigated Maze of Rules
Unusual Partnership Was Crafted to Heed Rules on Insider Trading
By Liz Hoffman
The Wall Street Journal
April 22, 2014
[William] Ackman’s joint bid with Valeant lays out a legal template for what experts say could be an increasingly common type of deal, combining the strategic drive of a corporate acquirer with the boardroom wedge provided by an activist investor. It comes as activists are shedding their outsider status, giving rise to concerns over how they share and receive market tips. …
Mr. Ackman knew of the impending offer for Allergan and has engineered an exit—he plans to sell his Allergan shares into Valeant’s bid. Securities-law experts say the moves don’t appear to violate insider-trading or disclosure laws.
Insider-trading violations, for example, only occur if there has been a breach of duty. Valeant told Mr. Ackman of its plans for Allergan willingly and incorporated his share buying into its strategy.
“Mr. Ackman has been given this information with the expectation he will trade on it,” said Ronald Colombo, who teaches securities law at Hofstra University. “He’s not breaching a duty to anybody.”
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