SEC and Drugmaker Allergan Reach Settlement over M&A Disclosure Violations

January 23, 2017

The U.S. Securities and Exchange Commission and drugmaker Allergan settled claims that Allergan failed to disclose negotiations with third parties following the announcement of a hostile tender offer by Valeant and co-bidder Pershing Square.


  • The tender offer rules require the target of a tender offer to disclose whether or not, in response to the tender offer, it is engaged in negotiations that relate to a merger or acquisition transaction.
  • If no negotiations are underway at the time of the target company’s initial disclosure, disclosure laws require the target company to affirmatively state that fact and to promptly amend its filing to disclose if negotiations have later commenced, although disclosure of the possible terms of or the parties to the transaction is not required if an agreement in principle has not been reached.
  • When Allergan engaged in negotiations on price with potential M&A counterparties while Valeant’s and Pershing Square’s tender offer was pending, Allergan violated disclosure laws by failing to amend its Schedule 14D-9 to disclose to its shareholders that third-party negotiations had commenced.
  • Allergan agreed to pay a US$15 million civil money penalty to resolve the disclosure claims.
  • This is the SEC’s most recent push for disclosure in an area that has seen a number of enforcement actions over the years, including several high profile matters dating back to the 1980s.

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