A vial of Allergan Inc. Botox cosmetic and a syringe.
A vial of Allergan Inc. Botox cosmetic and a syringe. (Patrick Fallon/Getty)

Botox maker Allergan Inc. ramped up its defense against a $53 billion hostile takeover bid from Valeant Pharmaceuticals International Inc. on Friday by directing Latham & Watkins and Wachtell, Lipton, Rosen & Katz to sue Valeant.

In the 51-page complaint filed in federal district court in Santa Ana, Calif., Allergan claims that Valeant colluded with activist investor Bill Ackman on its unsolicited bid. That enabled Ackman’s hedge fund Pershing Square Capital Management LP to trade on inside information before Valeant announced its takeover offer.

The complaint claims that Pershing Square bought more than $3.2 billion of Allergan stock and securities between February and April knowing that Valeant planned to mount a takeover attempt. According to Allergan’s complaint, stockholders who sold before Valeant’s initial offer on April 22 lost out on roughly $1.2 billion in gains.

Allergan wants an order declaring that Pershing Square and Ackman violated U.S. securities law by trading on material, nonpublic information. It also wants the Pershing defendants to rescind any illegal Allergan purchases. The company is also seeking an order declaring that Valeant acted illegally by sharing nonpublic information.

As our colleagues at the Am Law Daily previously reported, Valeant has called on counsel at Sullivan & Cromwell, Skadden, Arps, Slate, Meagher & Flom and Osler, Hoskin & Harcourt to work on its unsolicited Allergan bid. Pershing Square is using counsel from Kirkland & Ellis and Davies Ward Phillips & Vineberg.

We reached out to representatives at Sullivan & Cromwell, Skadden, and Kirkland to see if they’ll be defending their clients in the federal lawsuit, but didn’t immediately hear back.