Allergan Inc. Rejected Actavis, Continues Courting Salix Pharmaceuticals, Ltd.
September 23, 2014
By Riley McDermid, BioSpace.com Breaking News Sr. Editor
Botox maker Allergan Inc (AGN) has rejected a takeover bid from pharmaceutical company Actavis PLC (ACT) and revived discussions to buy Salix Pharmaceuticals Ltd (SLXP), the Wall Street Journal reported late Monday.
The status of the talks was not disclosed and unnamed sources were cited for the news, which send shares of both companies gyrating in after hours trading. Spokespeople from both firms declined to comment.
Both Salix and Allergan have been in the headlines all summer, as Allergan attempts to fend off a shareholder revolt and $53 billion hostile offer from Valeant Pharmaceuticals Inc., and Salix tries to convince stakeholders a deal with an Irish subsidiary of Cosmo Pharmaceuticals SpA (SWX) is in their best efforts.
Allergan has also had to deal with Activist hedge fund investor Bill Ackman has been heavily involved in the effort to force Allergan to accept a $53 billion bid for the company from Valeant.
Allergan has already had to concede that 35 percent of its shareholders have asked for a special meeting with management slated for Dec. 18., during which the takeover bid is likely to be heavily favored.
The shareholders involved only own around 2.8 percent of Allergan but they meet the threshold under U.S. securities law, which requires 25 percent of a company’s investors are needed to call a special meeting for shareholders
Ackman's $15 billion hedge fund Pershing Square Capital Management is a top shareholder in Valeant, which has been attempting a hostile takeover of Allergan since April. Valeant quickly upped its offer over a series of weeks and eventually launched a tender offer.
Complicating matters further, Valeant disclosed in August that it being audited by the U.S. Internal Revenue Service for the 2011 and 2012 tax years, while a simultaneous tax record examination is being conducted by the Canada Revenue Agency for the years 2010 and 2011.
Both companies have been using the legal system to force their points. In August, Allergan sued the two companies, alleging their cozy relationship has run afoul of insider trading regulations. Ackman owns 9.7 percent of Allergan, an amount the company has asked a court to disqualify as counting towards a 25 percent shareholder quorum.
The company has enlisted Goldman, Sachs & Co. and BofA Merrill Lynch as financial advisors and Latham & Watkins, Richards, Layton & Finger, P.A. andWachtell, Lipton, Rosen & Katz as legal counsel.