Allergan Inc. is in talks to acquire Salix Pharmaceuticals Ltd., reviving discussions that began in July in an effort to fend off a hostile takeover offer from Valeant Pharmaceuticals International Inc., people with knowledge of the matter said.
The Botox-maker’s talks with Salix went dormant for a few weeks because Salix wanted a higher price than Allergan wanted to pay, said the people, who asked not to be identified discussing private information. While the talks are active again, a deal may not be reached. Salix has a market value of about $10 billion based on yesterday’s closing price.
Allergan approached Salix about buying the drugmaker because purchasing a sizable competitor could help Allergan defend itself against Valeant by making it a much more expensive target.
Meanwhile, Actavis Plc also is interested in buying Allergan and approached the company in August, a person familiar with the matter said. That offer wasn’t much higher than what Valeant offered earlier this year, the person said. Actavis doesn’t want to miss out on a round of deals going on in the pharmaceuticals business, the person said.
Representatives for Allergan, based in Irvine, California, Actavis, based in Parsippany, New Jersey, and Salix, based in Raleigh, North Carolina declined to comment.
Allergan CEO David Pyott said in July that the company was seeking acquisitions and “has a lot of options.”
Valeant teamed up with activist investor Bill Ackman’s Pershing Square Capital Management LP in April to make a $54 billion cash and stock offer for Allergan, which the target has rebuffed. Valeant has raised its offer twice, recently to $72 in cash and 0.83 of its own shares for each Allergan share.
Allergan, up 50 percent this year, ended trading yesterday at $166.12 a share, giving it a market value of about $51 billion. Salix, which is in the middle of its own merger with a unit of Italian drugmaker Cosmo Pharmaceuticals SpA, is up 78 percent this year.
Cosmo hasn’t been informed of any talks between Allergan and Salix, said Chief Financial Officer Chris Tanner. Shares of the Lainate-based company fell as much as 9.9 percent today in Zurich, where they trade. A deal between Salix and Allergan would probably halt the Cosmo unit’s merger plan, the Wall Street Journal said.
“In principle we continue working as if nothing ever happened,” Tanner said by phone today. Salix’s planned merger with the Cosmo unit “would be a nice opportunity if it happens, if it doesn’t then we’re certainly unfazed.”
The Wall Street Journal reported earlier that Allergan and Salix are in advanced talks and that Actavis made an unsuccessful offer for Allergan.
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