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Allergan Inc Considers Buying Salix Pharmaceuticals

Published : 2014-09-23

The maker of Botox, Allergan is in talks to buy drug maker, Salix Pharmaceuticals. Allergan is currently fending off a hostile bid by Pershing Square Capital Management and Valeant Pharmaceuticals.

Allergan’s acquisition of Salix, if successful, would probably derail Pershing Square and Valeant’s $53 billion takeover attempt. It would also ultimately mean the end of Salix’s own deal to buy the Irish unit of Cosmo Pharmaceuticals of Italy, Cosmo Technologies, in a tax inversion deal.

According to sources, talks between Salix and Allergan continue but could still fall apart. Both companies still had not come to terms.

Salix has a market value of over $10 billion, and its stock was up 16 percent in after-hours trading.

However, there are several potential obstacles to an Allergan acquisition of Salix. According to sources, another big drug company, Actavis, recently made an offer to buy Allergan.

Recently, Actavis has struck several big deals, including the $25 billion acquisition of Forest Laboratories this year, and last year’s $5 billion deal for Warner Chilcott. These deals have left Actavis with substantial debt, which means that it might be hard to finance an acquisition of Allergan.

The tangled web of proposed deals adds to one of the most complex and contentious merger situations in years. For Allergan, Pershing Square and Valeant teamed up this spring to make an unsolicited offer. It was the first time an activist investor like the founder of Pershing Square, William A. Ackman had teamed up with a corporate acquirer to make an unsolicited bid.

However, Allergan has steadfastly refused the pair’s approaches and attacked Valeant’s business model as unsustainable, turning the situation hostile and setting off lawsuits and counterclaims in California and Delaware.

Shares of Allergan were up slightly in-after hours trading on Monday, while shares of Valeant were down slightly.

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