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The Morning Brief: Pershing Square, Allergan Settle Poison Pill Fight

William Ackman’s Pershing Square Capital Management and Allergan have reached a settlement over the ambiguity of the Botox maker’s poison pill, according to the Wall Street Journal. Under the agreement, the activist hedge fund firm, which owns 9.7 percent of Allergan’s stock, won’t trigger the pill if it gets other investors to agree to call a special shareholder meeting. Ackman and his supporters are trying to remove Allergan’s directors, which they believe will pave the way for Valeant Pharmaceuticals to acquire the company. Pershing Square had filed a lawsuit earlier this month over this issue. To be able to call the special meeting, shareholders holding at least 25 percent of the shares must support this effort.

Activist hedge fund firm Sandell Asset Management has told Meritor, Inc. that it is unhappy with the antitrust settlement recently announced between a company subsidiary and Eaton Corporation. Last week, Eaton agreed to pay $500 million to ZF Meritor, a joint venture between a Meritor subsidiary and Germany’s ZF Friedrichshafen AG. Sandell also said it disagreed with Meritor’s decision to use the $209 million in proceeds it will receive from the settlement to pre-fund future pension obligations. The hedge fund firm added in a regulatory filing that Meritor “could best maximize long-term shareholder value” by immediately conducting a Dutch auction tender offer at a premium to the current share price. Sandell also said it may continue to engage in discussions with Meritor’s management and board and other shareholders. Sandell now owns 5.1 percent of the shares of Meritor, a supplier of parts for commercial vehicles and industrial markets.

Dollar General Corp., rumored to be mulling a takeover of hedge fund activist favorite Dollar General, announced that chief executive officer Rick Dreiling plans to retire in 2015. The announcement could attract the activist set to the stock and perhaps trigger a merger with its rival. Major holders of Dollar General include Tiger Cubs Lone Pine Capital and Tiger Global Management.

Jeffrey Ubben’s ValueAct Capital sold 750,000 shares of Adobe Systems, reducing its total holdings to 4.9 percent.

Daniel Och’s OZ Management, which is managed by New York–based Och Ziff Capital Management, boosted its passive stake in B/E Aerospace by roughly 1.2 million shares, to 6.50 percent of the total outstanding.

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