Bill Ackman has cleaned up this year to the tune of $1 billion. He has also profited from Actavis’ announced merger with Botox maker Allergan, although for many months, he was pushing the company to accept a bid from Valeant, as reported by the New York Post. Now he is being slapped with charges of insider trading at Allergan, and he is seeking to get the case dismissed.
Allergan’s management alleges that Ackman was in cahoots with Valeant and made substantial steps towards a hostile takeover before making plans public. The claims says Ackman abused his position as shareholder to try to get the company taken over. However, Valeant’s bid of $50 million, an amount Allergan CEO David Pyott said severely undervalued the company, was rejected in favor of Actavis’ $66 billion stock and cash offer. Because Allergan was not actually taken over by Valeant, Ackman thinks claims of insider trading are moot.
In the meantime, Ackman has not given up on trying to close down Herbalife, and has a significant short position. He claims the company is a ponzi scheme and its business model is illegal. While Herbalife has been trying to clean up its image, there have been accusations of false claims about its products, corruption within the company and a lack of oversight of its representatives.