Valeant Pharmaceuticals Intl Inc (VRX) Agrees to Pay $96 Million in Preliminary Litigation Resolution to ‘Eliminate Disruption’ of Its Business Revival


Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and its team are raring to continue the rebounding recovery of the once beleaguered biotech giant, and for CEO and chairman Joseph Papa, this means settling old litigation ghosts.

Today, the giant’s team revealed that to reach resolution in allegations against insider trading back in a failed 2014 acquisition grab for Allergan and its Botox empire, both Bill Ackman’s Pershing Square as well as Valeant are agreeing to shell out $290 million to settle claims- subject to the court’s approval. Yet, under the terms of a newly revised Litigation Management deal among the other defendants, VRX is paying 33% of the settlement, which translates to $96.25 million. This looks like the price VRX is willing to pay so that by the agreement, both the company as well as other defendants admit no wrongdoing at play. In turn, activist Ackman’s Pershing Square is poised to dole out $193.75 million.

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In the cases of Basile v. Valeant Pharmaceuticals International, Inc. et al. (Case No. 14-cv-02004-DOC) and Timber Hill LLC v. Pershing Square Capital Management, L.P., et al. (Case No. 17-cv-04776-DOC) in the U.S. District Court for the Central District of California have preliminarily agreed to resolve the claims of the litigation. In the lawsuit, Allergan’s investors pointed a finger at Ackman for buying their shares with insider trading secret savvy: knowing that VRS had been targeting a takeover. Ackman’s company pocketed north of $2 billion on Allergan shares after Actavis turned out to purchase the drug maker, with Valeant’s bid dismissed in the process.

Though Ackman stands by that this “case had absolutely no merit,” he ultimately realized the bigger picture: “it was in the best interest of our investors to settle the case now instead of continuing to spend substantial time and resources pursuing the litigation.”

Papa cheers for his company, “We believe this agreement to resolve the legacy litigation is in the best interests of the Company, because it enables us to focus our attention and resources on the transformation of Valeant,” adding: “Though we always have remained confident in our position and were prepared to try these cases on their merits, this agreement will eliminate disruption to our business.”

Shares of Valeant closed today at $20.78, down 1.80% or -$0.38.

Valeant Pharmaceuticals engages in the development, manufacture, and market of a broad range of pharmaceutical products in the areas of dermatology, gastrointestinal disorders, eye health, neurology and branded generics. It operates through the following segments: The Bausch + Lomb/International; The Branded Rx; and The U.S. Diversified products.

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