According to the WSJ's Ronald Barusch, Allergan's (AGN -1%) lawsuit against Valeant Pharmaceuticals (VRX -1.1%) and Pershing Square alleging insider trading is merely a delaying tactic. One of the company's bylaws requires that anyone seeking to convene a special meeting of shareholders must comply with all aspects of the law regarding tender offers. In its suit, Allergan alleges Pershing Square's purchases of AGN shares violated an SEC rule that forbids one company from buying shares from another based on non-public information if the latter firm has taken substantial steps towards a tender offer. In this scenario, Allergan's corporate secretary will be required to declare the special meeting request ineffective.
Pershing Square and Valeant both regard Allergan's allegations as baseless. Nevertheless, they will be forced to countersue which will precipitate a delay in Valeant's hostile bid.