By Jonathan D. Rockoff, Dana Mattioli and Liz Hoffman
Actavis PLC is nearing a takeover deal for Allergan Inc. that
could swipe the Botox maker from its hostile suitor, Valeant
Pharmaceuticals International Inc., according to people familiar
with the matter.
The boards of the two companies are expected to meet to review a
cash-and-stock takeover of Allergan by Actavis, the people said. An
agreement could be announced as early as Monday, some of the people
said, but timing could slip and one of them said later in the week
could be more likely.
The price the companies are contemplating couldn't be learned,
but it would likely be at a premium to Allergan's market
capitalization of $59 billion.
But that is still a big if, in part because Valeant could again
raise its offer for Allergan in an effort to wrest the company from
its rival.
The deal would be a big bite for Actavis, which, with a market
value of $64 billion, is barely bigger than Allergan,whose shares
to be sure have received a boost from the possibility it would be
bought.
Valeant and activist investor William Ackman have been seeking
for months to seal a deal with Allergan. Their most recent bid was
$53 billion in cash and stock, though Valeant has entertained
boosting it. Valeant's initial bid valued the company at $46
billion.
A combination of Allergan and Actavis would create a diversified
pharmaceutical company selling brand-name and generic drugs for
stomach, eye, skin and other conditions. The company would ring up
about $23 billion a year in sales, putting it around the top 10 of
pharmaceutical companies by revenue.
A deal between Actavis and Allergan also would likely be the
year's largest in a robust year for corporate matchmaking.
Other blockbuster deals in the works earlier this year, such as
Pfizer Inc.'s attempted $120 billion takeover of AstraZeneca PLC
and AbbVie Inc.'s $54 billion proposed acquisition of Shire PLC,
have since collapsed.
If an agreement were to materialize, it would also complicate
yet again a contentious takeover battle that began in April when
Mr. Ackman and Valeant teamed up to try and buy Allergan. Valeant's
attempted takeover of Allergan marks one of the most complex and
unusual deal situations of the year, with a company aligning itself
with an activist investor. A number of other potential combinations
have also sprung up around the two companies and Actavis, creating
a complex web that could reshape the health-care industry.
Mr. Ackman's Pershing Square Capital Management LP built a
nearly 10% stake in Allergan before Valeant made its bid.
Allergan declined to enter negotiations, criticizing Valeant as
a corporate raider that grew by buying up profitable companies and
then heavily cutting costs, especially the research it says is
needed for future growth. Valeant has pushed back against that
portrayal of the company.
Along the way, other side deals were contemplated that would
have made Valeant's pursuit even more difficult. This summer, for
instance, Allergan held talks to buy Salix Pharmaceuticals Ltd.,
which would have made Allergan even bigger and more complicated to
buy. Those talks ended and Salix recently announced a revision in
its accounting that indicated sales of its drugs weren't as strong
as Wall Street had expected, sending the shares down sharply.
While Actavis has been exploring a deal with Allergan, Pfizer
was for a time pursuing a takeover of Actavis, a person familiar
with the matter has said. But Actavis rejected a deal, the person
said.
As of November 10, there had been $367 billion of health-care
deals so far this year, the largest number on record for that
period since at least 1995, according to Dealogic.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com, Dana
Mattioli at dana.mattioli@wsj.com and Liz Hoffman at
liz.hoffman@wsj.com
Access Investor Kit for Valeant Pharmaceuticals International,
Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=CA91911K1021
Access Investor Kit for Allergan, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0184901025
Access Investor Kit for Salix Pharmaceuticals Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US7954351067
Subscribe to WSJ: http://online.wsj.com?mod=djnwires