A Pennsylvania pension fund has filed a lawsuit and accused Cephalon officials of failing to act in the best interests of investors regarding a $5.7 billion buyout bid by rival Mississauga, Ontario-based Valeant Pharmaceuticals International, according to a Bloomberg report.

Cephalon, a maker of sleep and pain drugs, said yesterday that it will consider the bid next week. In its complaint, the pension fund claimed the company has been shortchanging shareholders by not considering the $73-a-share hostile offer.

Lawyers for the Dauphin County pension plan said the companys directors are failing to act in the interest of Cephalon stockholders by turning away repeated offers by the Canadian drugmaker, as reported in Bloomberg.

The fund wants a Delaware judge to force Cephalons board to consider Valeants offer and bar use of the companys so-called poison-pill defense to frustrate the buyout bid, according to the lawsuit. That defense makes acquisitions more expensive.

Natalie de Vane, a Cephalon spokeswoman, said yesterday in a phone interview, Our board of directors will meet early next week to consider Valeants proposal.

The case is County of Dauphin Retirement Plan v. Winger, CA NO. 6332, Delaware Chancery Court (Wilmington).

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