Sector News

Actavis ready to thwart Valeant with $60B-plus Allergan buyout: Bloomberg

November 12, 2014
Life sciences
Heads up, Valeant. Actavis is reportedly in talks to snatch up Allergan–and word is it could happen quickly.
The Dublin-based white knight could work out a deal for Valeant’s hostile bid target in as few as two weeks, Bloomberg’s sources say. There’s just one price hurdle standing in the way: Allergan is seeking more than $210 a share, while Actavis is looking to pay closer to $200–a difference of about $3 billion.
Assuming the companies get that gap worked out quickly, they may be able to reach a deal this month. That would be ahead of a Dec. 18 special shareholder meeting, at which activist investor Bill Ackman aims to replace most of Allergan’s directors with a slate more friendly to Valeant’s bid. But there’s no guarantee Actavis and Allergan can pull off an agreement before then, the news services’ sources say.
Don’t count Valeant out just yet, though, Sterne Agee analyst Shibani Malhotra said in a note to investors. While she sees an Actavis/Allergan combo as “a probable outcome,” she also expects Canada-based Valeant “to increase its bid for Allergan in the near term.”
Indeed, Valeant CEO J. Michael Pearson has said his company would hike its offer if it needed to–past $200 a share, in fact. And earlier this week, Ackman suggested Allergan’s board open up the company to an auction between Actavis and Valeant, noting that he believes “Valeant can pay substantially more for Allergan” than its competitor–perhaps because Valeant would be more eager to cut costs after the close.
But Ackman and Valeant may be lining up their next move, just in case they don’t land the California drugmaker. Ackman has bought up an 8.5% stake in animal health giant Zoetis, and sources tell The Wall Street Journal Ackman may pressure the Pfizer spinoff to sell itself to Valeant if the Allergan bid fails.
By Carly Helfand

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