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Allergan Inc. (AGN) Approaches Salix Pharmaceuticals, Ltd. (SLXP) To Fend Off Valeant Pharmaceuticals International (VRX)'s Hostile Bid

8/20/2014 6:27:57 AM

Allergan Inc. Approaches Salix Pharmaceuticals, Ltd. To Fend Off Valeant Pharmaceuticals International's Hostile Bid Allergan Inc. Approaches Salix Pharmaceuticals, Ltd. To Fend Off Valeant Pharmaceuticals International's Hostile Bid

August 20, 2014
By Mark Terry, Breaking News Staff

Allergan Inc. (AGN) has broached acquiring Salix Pharmaceuticals, Ltd. (SLXP), at least in part to fend off a hostile takeover from Valeant Pharmaceuticals International (VRX) and Pershing Square Capital Management. As reported last week, the Security and Exchange Commission (SEC) is taking a close look at a takeover bid of Allergan by Valeant and Pershing Square after allegations of insider trading.

Best known for manufacturing Botox, Allergan has expressed interest in Raleigh, North Carolina-based Salix Pharmaceuticals, as well as in acquiring at least one other company. Salix is a specialty pharmaceutical company focused on gastroenterology treatments.

Valeant has been on a company-buying binge since 2008, buying more than 100 smaller companies. The SEC investigation revolves around Pershing Square acquiring about 10% of Allergan stock in March, then later announcing a joint bid with Valeant which drove the stock up, resulting in $1 billion in gains. Allergan responded with a lawsuit alleging insider trading.
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Yesterday's story that Allergan had approached Salix caused Salix stock to rise with a gain of 21.63 at $160.80. Trades were at the highest volume of the year. In July of this year, Salix announced it would merge with Italy-based Cosmo Pharmaceuticals. In what seems like a tax inversion deal, Salix’s headquarters would become a part of Cosmo Tech, which is headquartered in Ireland. The merger is believed to improve the companies’ gastrointestinal U.S. product development plan and set them up for further acquisitions. Cosmo is estimated at $2.7 billion.

Salix has a market cap of approximately $10 billion, which climbed after the shares jumped yesterday. The original bid Valeant made for Allergan was $53 billion, which Allergan shareholders have indicated is too low. The Allergan takeover bid has become increasingly hostile, with news that Pershing Square’s William Ackman is asking for a special meeting of shareholders in order to add six new members to Allergan’s board, which would help push through the deal.

The second company that Allergan is looking at is San Francisco-based Actelion Ltd., headquartered in Allschwil/Basel, Switzerland. The company focuses on endothelial receptor antagonists, with their products designed for the treatment of pulmonary arterial hypertension (PAH). No details have been released about Allergan’s discussions with Actelion.

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