In yet another twist to the raging takeover battle between Allergan and Valeant, the Botox maker is now dragging its suitors to court over alleged insider trading surrounding the deal.

Allergan has filed a law suit in the US District Court for the Central District of California accusing Valeant and Pershing Square of fraudulent practices and failing to disclose legally required information.

The lawsuit claims that “debt-laden” Valeant and Pershing (lined up to finance the move) colluded to allow the latter to buy $3.2 billion worth of Allergan shares between February and April before plans for the takeover were announced. The value of these shares then rocketed - by more than $1 billion - when the proposed takeover became public knowledge late April. 

Explaining its decision, Allergan said it is “important that the rights of the Company’s stockholders not be infringed by the actions of one hedge fund that significantly profited (to the detriment of other stockholders and the market) by trading in Allergan securities while in possession of material non-public information”. 

However, in a joint statement Valeant and Pershing said the complaint makes “baseless claims” and that the “true purpose in bringing the litigation is an attempt to interfere with shareholders' efforts to call a special meeting”.  

"This is a shameless attempt by Allergan to delay the shareholders' fundamental right to call a special meeting and vote their shares,” said Bill Ackman, Pershing’s chief executive, and he claimed the firm’s “determination to waste money on a baseless lawsuit against its largest shareholder further demonstrates why this board of directors should be removed”.