The Morning Brief: Another Day, Another Scolding from William Ackman

William Ackman of Pershing Square Capital Management has fired off yet another letter in his nearly daily tit-for-tat tussle with Allergan. In Wednesday’s missive to lead director Michael Gallagher, the activist hedge fund manager reiterated his view that chairman and CEO David Pyott has “a disabling conflict of interest” when determining whether or not to accept Valeant Pharmaceuticals’ takeover offer, a view which Allergan had earlier disputed in a letter to employees. “The board must recognize his conflicts and that of other employees and put in place policies and procedures to minimize the risk that these conflicts interfere with maximizing shareholder value,” Ackman states, adding that there will be times when Pyott should be “isolated” from the process, and when independent directors should take a leadership role. “We were encouraged by our first discussion when you told us that Allergan’s board ‘has an open mind’ with ‘no entrenched views,’ and will show a high degree of ‘professionalism’ during its review process,” Ackman further states in the letter. He adds that by making Pyott the sole spokesman for the board, the board is not showing an appropriate degree of independence in the process, nor is the board able to receive candid feedback from the company’s owners. Ackman then calls on Allergan to retain independent counsel and advisers to carefully review Valeant’s proposal.

Alec Litowitz’s Magnetar Capital filed a lawsuit in Germany against McKesson Corp. The fund manager alleges that the drug retailer broke German law when it paid hedge fund Elliott Management more than other stakeholders in its acquisition of German-based Celesio AG earlier this year, according to the Wall Street Journal. In its lawsuit, Magnetar reportedly cites German law which requires all investors—both stockholders and bondholders—to receive the same treatment in a transaction. According to the report, earlier this year Elliott built a huge position in Celesio’s stock and two of its convertible bonds. After threatening to block McKesson’s takeover attempt, McKesson reportedly paid €31 ($42) for each Celesio convertible bond held by Elliott while other bondholders received about €23.50 ($32). “Under German takeover law, minority shareholders are entitled to receive the minimum price paid to all other shareholders,” Magnetar reportedly stated. According to the Journal, a McKesson spokesman stated: “We followed all relevant German laws in our transaction, and we launched our recent tender offer…with full approval from German securities regulators.”

A former hedge fund manager whose fund was shut down by regulators was arrested in Italy, Reuters reports. Alberto Micalizzi, who was fined $5.1 million in 2012 for hiding large losses to investors, was accused of participating in a massive $821.73 million fraud that reportedly harmed a number of companies, including Pirelli, JP Morgan and UBS, according to the report. Prosecutors also reportedly said in a statement that it issued arrest warrants for 14 associates of Micalizzi, some of whom are already in jail. Micalizzi was the chief executive of the now defunct London-based Dynamic Decisions Capital Management fund, which mainly invested in highly illiquid bonds. It was liquidated after losing more than 85 percent of its value, according to Reuters. Micalizzi then was banned from the financial services industry by Britain’s Financial Services Authority.

UBS trimmed its price target on Darden Restaurants to $49 from $51 and maintained its Neutral rating on the stock, asserting in a note to clients that Red Lobster’s sale “looks like it’s happening.” The investment bank states that “headwinds remain” and it sees few near-term catalysts to send the shares higher. If in fact the sale does go through, it will be very interesting to see whether activists Starboard Value and Barington Capital Group launch a proxy fight or liquidate their positions.

Tiger Global was one among several investors to participate in a $30 million series C funding for Thumbtack, a consumer service that helps people hire professionals ranging from photographers to tutors, according to This is at least the fourth investment made by the New York investment firm’s venture capital group this month.

Kenneth Griffin’s Citadel Advisors disclosed it owns 1.8 million shares, or 5.4 percent of Stewart Information Services Corp., a provider of title insurance. This is roughly triple its stake at the end of the first quarter, when it also owned $22 million in 6 percent bonds issued by the company.