Reports: Actavis Nears Deal To Acquire Allergan

(RTTNews) - Specialty pharmaceutical company Actavis plc (ACT) is nearing a deal to acquire Botox maker Allergan Inc. (AGN), according to media reports on Sunday. A deal could reportedly be announced as early as Monday.

An acquisition by Actavis would enable Allergan to fend off a hostile takeover bid from Canadian drug maker Valeant Pharmaceuticals Inc. (VRX.TO, VRX), which is supported in its bid by activist investor William Ackman's Pershing Square Capital Management LP.

Various media reports indicated that the acquisition price by Actavis for Allergan would be for more than $210 per share in cash and stock, and would include a higher percentage of cash than Valeant's current offer.

However, Actavis has a market capitalization of $64.61 billion, just bigger than Allergan's market capitalization of $59.18 billion. In addition, Valeant Pharma could sweeten its offer for Allergan from its most recent bid valued at $53 billion.

Irvine, California-based Allergan is trying to strike a deal before an investor meeting on December 18. The company is best known for its sales of wrinkle treatment Botox, while Actavis' best-selling drug is Alzheimer's treatment Namenda.

Actavis earlier this year closed the acquisition of Forest Laboratories Inc. for $25 billion and agreed to acquire Durata Therapeutics Inc. (DRTX) for about $675 million.

Actavis, based in Parsippany, New Jersey, obtained an Irish tax domicile by its purchase of Warner Chilcott Plc last year. Pfizer Inc. (PFE) had earlier evinced interest in buying Actavis, but no formal talks or offer have taken place.

Meanwhile, Allergan had held talks to buy Salix Pharmaceuticals Ltd. (SLXP) in order to fend off the $53 billion hostile bid from Valeant Pharma, but failed to reach a deal over valuation concerns.

Allergan is being pursued by Valeant Pharma for months now. Valeant, along with Ackman's hedge fund Pershing Square, started a takeover battle in April by making a bid to acquire Allergan for $46 billion in cash and stock. Pershing Square is the largest shareholder in Allergan with a 9.7 percent stake.

Valeant later sweetened its bid to about $53 billion. However, Allergan repeatedly spurned the offers, stating that they grossly undervalued the company. Allergan has called Valeant's business model unsustainable and said that a deal with Valeant would hurt its research and development program.

ACT closed Friday's trading at $243.77, up $2.14 or 0.89 percent on a volume of 1.84 million shares. AGN closed Friday's trading at $198.65, up $2.44 or 1.24 percent on a volume of 1.43 million shares.