Bill Ackman's Pershing Square announced Friday it has reached an "agreement in principle" to settle the firm's lawsuits with Allergan shareholders over the attempted acquisition of Allergan by Pershing Square and Valeant Pharmaceuticals in 2014.

The hedge fund firm and Valeant will split the $290 million settlement with Pershing Square paying $194 million and Valeant paying $96 million, subject to court approval.

"We continue to believe the case had absolutely no merit," said Pershing Square CEO Bill Ackman in the release. "We decided, however, that it was in the best interest of our investors to settle the case now instead of continuing to spend substantial time and resources pursuing the litigation."

The hedge fund previously had $75 million in legal reserves for the case.

Allergan shareholders alleged Pershing Square and Valeant improperly traded ahead of the company's hostile bid for Allergan.

"We believe this agreement to resolve the legacy litigation is in the best interests of the Company, because it enables us to focus our attention and resources on the transformation of Valeant," said Joseph Papa, chairman and CEO of Valeant in a separate release. "Though we always have remained confident in our position and were prepared to try these cases on their merits, this agreement will eliminate disruption to our business."

Pershing Square declined to comment beyond the announcement. Valeant referred to Papa's statement as its official comment.

Allergan did not immediately respond to a request for comment.

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