That same day, PS Fund 1 began snapping up stock in Allergan, adding to its position the next day. Its stock purchases came to a total cost of $75.9 million, the exact amount that Valeant had used to seed the partnership.
It was also the very most that a party in a proposed corporate transaction could purchase in the stock of a takeover transaction without triggering a required public filing under the Hart-Scott-Rodino Act, an antitrust provision overseen by the Federal Trade Commission (whose parameters happened to have changed on Feb. 24).
Since PS Fund 1 couldn't buy any more stock without the world knowing and, likely, juicing the price of Allergan at a time when it wanted to buy on the cheap, it then began purchasing options that gave it the right, but not the obligation, to buy stock at a future date, as well as some stock swaps that enabled it to buy Allergan in the future.
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Between March 3 and April 21, it spent more than $3.1 billion for the additional contracts, all of which were paid for by Pershing Square. (Ackman said at an investor conference on April 22 that his total investment was closer to $4 billion, and regulatory filings don't provide the costs of equity swaps PS Fund 1 bought in addition to the options and stock itself.)
Though spread out over the better part of two months, more than 40 percent of the options purchases occurred between April 11 and April 21, the date that the buyers announced their large position in Allergan. That is likely because SEC rules require that once a market participant acquires 5 percent of a stock, it must report the position within 10 days—a period during which the participant is free to buy additional shares.
By back-weighting those option and swap purchases, the fund stayed within the letter of the law, according to lawyers who have studied the transactions.
At the lengthy investor presentation on April 22, the day after PS Fund 1 revealed its stake in Allergan with a bid valuing the target company at about $46 billion, Ackman said he had made his Hart-Scott-Rodino filing with the FTC, and that he would convert his options into stock as soon as he received clearance to do so.
Presumably, that will be before the Allergan annual meeting on May 6, where shareholders will have a chance to vote on the proposed directors, executive compensation and a shareholder proposal that the board chairman be independent of the company.
Given that the Ackman partnership's stock position was relatively small as of March 11—the cutoff for shareholders who wanted their votes to be counted—Pershing Square and Valeant won't be able to use their expected 9.7 percent holdings in Allergan to affect much change.
But by posing tough questions at the podium or by advocating for reform with other investors at the meeting, they could create some fireworks.
—By CNBC's Kate Kelly.