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This 2002 file photo shows a vial of Botox, made by Allergan.Damian Dovarganes/The Associated Press

Allergan Inc. and its suitors Valeant Pharmaceuticals International Inc. and Pershing Square Capital Management LP have reached a settlement in the dispute over the holding of a special shareholders' meeting.

Under terms of the agreement, Allergan will hold a special meeting on Dec. 18, as previously intended, at which Pershing Square and Valeant will seek to remove a majority of Allergan's board in a hostile $53-billion (U.S.) attempt to take over the Botox maker.

Billionaire Bill Ackman's Pershing Square and Laval, Que.-based Valeant went to court last month to force a recalcitrant Allergan to hold the special meeting.

The takeover partners alleged that California-based Allergan was simply trying to buy time in order to find an alternative deal.

Allergan said late Monday it continues to believe the unsolicited offer is "grossly inadequate" and urged shareholders to reject the proposed tie-up.

Allergan is also challenging Valeant's business model, which it says is overly reliant on acquisitions to fuel growth.

A separate legal action in California, in which Allergan is seeking a preliminary injunction against Valeant and Pershing Square for alleged insider trading ahead of the takeover attempt, will go ahead.

If that action is successful, it will prevent Mr. Ackman, Pershing Square and Valeant from voting their Allergan shares at any meeting of stockholders, Allergan said late Monday.

Allergan alleges that Pershing Square and Valeant did an end run around insider-trading laws by quietly working in concert on the hostile takeover, launched in April.

"Valeant and Pershing Square believe that Allergan's claims and request for relief in the California litigation are entirely without merit and will ultimately be rejected," Pershing Square said in a statement.

Pershing Square is Allergan's largest shareholder, with a 9.7-per-cent stake in the company.

Pershing Square and Valeant say they have the support of 35.7 per cent of Allergan shares for the holding of a special meeting, well above the 25 per cent required.