Sector News

Allergan Rejected Offer From Actavis

September 23, 2014
Life sciences
Pharmaceutical company Actavis PLC recently made a bid for Allergan Inc., but the Botox maker rejected the proposal and is closing in on its own takeover, said people familiar with the matter.
Allergan, which for months has been trying to fend off a $53 billion hostile takeover offer from Valeant Pharmaceuticals International Inc., is now in advanced talks to buy Salix Pharmaceuticals Ltd., some of the people said. Such a deal could make Allergan too big and complicated for Valeant to buy.
An Allergan acquisition of Salix, likely valued at more than $10 billion in cash, could be announced late this week or next, some of the people said. The talks, which have been on and off before, could fall apart again.
Salix has agreed to merge with a unit of Italy’s Cosmo Pharmaceuticals COPN.EB -8.65%  SpA and plans to locate the combined company in Ireland for tax purposes. An agreement with Allergan would likely halt that deal, which already is in danger of getting voted down by Salix shareholders, people familiar with the matter said.
Actavis lobbed its all-cash offer for Allergan last month, one of the people said. The amount of the bid couldn’t be learned, but it was likely in the neighborhood of Allergan’s current market value of roughly $50 billion. According to one of the people, Allergan rejected the offer in part because it is focused on sealing a deal with Salix.
Actavis remains interested in an acquisition of Allergan, but only if it is friendly, one person said. As part of its approach, Actavis pledged to maintain Allergan’s investment in research and development, in contrast to Valeant, which has indicated it would cut back on such spending should its bid succeed.
Allergan has made no secret of its desire to make an acquisition of its own, and The Wall Street Journal reported in August that it had approached Salix, a North Carolina company specializing in drugs for gastrointestinal conditions that now has a market value of $10.3 billion. Allergan believes the deal could add significantly to its per-share earnings, a person said.
Allergan shareholders haven’t raised much of a public fuss over the company’s intention to make an acquisition that could thwart Valeant’s cash-and-stock offer.
But the presence of a previously unknown alternative from Actavis could change that and upend the dynamics of the tussle. Allergan has questioned the value of Valeant’s stock and criticized its rival’s strategy of cutting R&D spending. Allergan could have a harder time arguing against a deal with Actavis, given that the bid was all-cash and that Actavis appears committed to R&D. That could prompt Allergan shareholders to pressure the company to start a formal sales process, some bankers said.
Still, Allergan may be able to buy Salix and stay independent. By paying for Salix with cash, Allergan would sidestep the need for a shareholder vote on the deal, which could stymie any move on the part of its shareholders to block the deal.
Salix shares rose more than 10% in after-hours trading, following The Journal’s report on the talks.
Either way, news that the two companies are close to sealing a deal, and Actavis’s entry into the fray, deepen the intrigue surrounding Allergan, a once-sleepy maker of eye drops that under Chief Executive David Pyott generated $6.3 billion in total revenue last year.
That a deal with Salix could be imminent is also bound to inflame tensions between Valeant and Allergan. The two companies have been sparring publicly and in court since Valeant in April made its bid in conjunction with activist investor William Ackman.
Allergan shareholders are slated to vote Dec. 18 on whether to oust a majority of its board—at a meeting sought by Valeant and Mr. Ackman. Valeant and Pershing Square Capital Management LP, Mr. Ackman’s hedge fund, want to install directors who would be more likely to approve the deal and rallied the support of more than 35% of Allergan shares to hold the meeting. They will need at least another 15% to win the board vote.
Allergan, meanwhile, has sued to disqualify Pershing Square’s 9.7% Allergan stake on the grounds it was accumulated in violation of insider-trading laws. Pershing Square and Valeant have said the trading was legal. That case is pending.
Once a small maker of generic women’s health drugs, Actavis has been bulking up in recent years, in July paying $25 billion for Forest Laboratories Inc. Actavis, based in Ireland, has indicated it plans to continue making deals even as it seeks to increase its own sales to more than $15 billion next year.
Actavis is developing a portfolio of generic and branded drugs with a range of prices aimed at appealing to hospitals and other big drug buyers, CEO Brent Saunders and Executive Chairman Paul Bisaro said in June. Both men said their company was taking a different tack than Valeant by making major investments in developing new drugs and in marketing brands.
By Jonathan D. Rockoff, Liz Hoffman and Dana Mattioli 

Related News

September 18, 2020

Eli Lilly, Amgen join forces to scale production of COVID-19 antibody cocktails

Life sciences

Months of fervid research have whittled away most potential options to treat patients with COVID-19, a group of antibody cocktails still hold promise. Eli Lilly believes so strongly in its contender that it’s […]

September 16, 2020

Takeda unveils new Boston R&D manufacturing center for cell therapy pipeline push

Life sciences

Japanese drugmaker Takeda has trumpeted its plan in recent years to cut billions of dollars in costs and pivot around oncology and rare diseases. A key part of that strategy […]

September 15, 2020

AstraZeneca, Oxford restart stalled COVID-19 test as Pfizer ramps up trial numbers for its vaccine

Life sciences

Just under a week after it stopped its key phase 3 pandemic vaccine test, AstraZeneca and the University of Oxford have been given the green light to restart in the […]