Allergan, maker of the popular anti-wrinkle drug Botox, is in talks with another pharmaceutical company Thursday, just days after the drugmaker was approached about an offer that could rival Valeant Pharmaceuticals bid.
Sources familiar with the situation identified the competing firm as Actavis (ACT), the New Jersey-based maker of specialty drugs. The potential merger talks could eventually lead to “negotiations,” the company said in a filing with the Securities and Exchange Commission.
The bid could possibly thwart Valeant’s $54 billion hostile takeover offer. Valeant (VRX) has been working hand-in-hand with Bill Ackman’s Pershing Square Capital Management to replace members of Allergan’s board of directors with representatives that would favor the tax-inversion takeover — a structure that would allow Valeant to extract additional value due to lower tax burdens after shifting Allergan’s headquarters from its current California locale to its own Canadian hometown. The standard corporate tax rate in the U.S. is 35% compared to up to 15% in Canada.
Allergan (AGN) was approached with another offer three days ago, according to a filing with the SEC. At the time, Allergan didn’t pursue talks with the company, which was revealed to be Actavis, because it was waiting for a California judge to decide on an injunction to forbid Ackman from voting at the upcoming Dec. 18 shareholder meeting.
Allergan had been pursuing the injunction because it felt Ackman’s actions could be considered insider trading. The activist investor holds a 10% stake in the company and has been publicly aligned with Valeant’s bid from the beginning.
The judge ruled in favor of Ackman, who is allowed to vote his shares as long as both Pershing and Valeant add disclosures to their proxy filing.
—Reuters contributed to this report.
