Actavis is in the latter stages of negotiating a takeover deal with Allergan that would scupper Valeant’s hostile bid, according to Bloomberg.
Citing “people with knowledge of the matter”, the news agency reports that Ireland-based Actavis has already made an offer of $200 per share for speciality drugmaker Allergan, or around $60bn, but suggests the latter is trying to push the bid up to around $210.
Canada’s Valeant said at the end of last month that it was prepared to raise the value of its offer to “at least $200 a share”. However, analysts suggested the increase from its earlier $176 per share offer sounded “less like a $200 offer than a promise of a future stock price rise”.
Actavis has been repeatedly put forward as a possible white knight bidder for Allergan, in a move that would make the combined company too big and expensive for the Canadian firm to buy. An earlier all-cash offer was reportedly rejected by Allergan, and it is thought that the latest negotiations hinge on an additional Actavis stock component being added to the pot.
If the boards of Actavis and Allergan can agree a proposal this month, it could be presented to the latter’s shareholders at the special meeting called for December 18 as an alternative to the Valeant bid.
Valeant and its partner Pershing Square Capital – led by activist investor Bill Ackman – want to use the meeting to replace several of Allergan’s board members with people who would support their $53bn takeover attempt. Earlier this month, a US district court ruled that Pershing could use its 9.7% stake as a block vote at the meeting.
Allergan said yesterday it had tweaked its bylaws to make it easier for shareholders to call for special meetings – after the procedural hurdles associated with the process were called into question by shareholders and proxy advisory firm Institutional Shareholder Services (ISS).
For example, the company has now agreed to set a date within 90 days of a request for a special meeting rather than leaving it to the board’s discretion.
Allergan has repeatedly claimed that Valeant’s offer undervalues its business, and that the Canadian company’s business model is flawed and overly-dependent on cost cutting that would jeopardise the value in Allergan’s R&D pipeline.
Valeant and Pershing’s plan B?
Meanwhile, rumours are also circulating that Pershing may try to force through a marriage between Valeant and animal health company Zoetis – which was spun-out of Pfizer last year – if the Allergan takeover doesn’t play out.
Pershing has taken an 8.5% stake in Zoetis, immediately leading to speculation that the fund will try to take the same tack as Allergan and pressure Zoetis into a sale.
Meanwhile, that tactic remains under scrutiny. The judge in the district court that cleared the path for Pershing to vote at the Allergan meeting also said there were “serious questions” to be answered about whether Pershing and Valeant’s combined bid contravened insider trading rules.