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Actavis Plc is in talks to acquire Allergan Inc for at least $60 billion, or more than $200 a share, with a possible agreement as little as two weeks away, said people with knowledge of the matter.
The two companies are trying to narrow a gap of about $3 billion between what Actavis wants to pay and what Allergan is asking for, said two of the people, asking not to be identified discussing private information. The maker of anti-wrinkle treatment Botox is seeking more than $210 a share while Actavis wants to pay closer to $200, said two of the people.
Any offer from Actavis will likely include its own shares as well as cash, the people said. Irvine, California-based Allergan rose 1.3 per cent to $197.85 a share as of 10:08 am in New York on Wednesday, giving the company a market value of about $59 billion.
The companies may be able to reach a deal this month, the people said, as Allergan seeks to fend off a hostile bid from Valeant Pharmaceuticals International Inc. Valeant has said it's willing to pay at least $200 a share for Allergan and has the backing of Allergan's largest shareholder - activist investor Bill Ackman's Pershing Square Capital Management LP.
Although the talks could drag on, and there's no certainty that the two sides will reach an agreement, Allergan is trying to strike a deal before an investor meeting on December 18, the people said. That's when shareholders will vote on Valeant and Ackman's proposal to remove Allergan directors, with a plan to eventually replace them with those who are more amenable to Valeant's offer.
"Grossly Inadequate"
Allergan has described Valeant's offers as "grossly inadequate" and argued the Canadian company would gut its research and development budget and use its cash flow to pay down debt accumulated from previous acquisitions.
Allergan spokeswoman Bonnie Jacobs declined to comment as did David Belian, a spokesman for Actavis.
Actavis gained 0.4 per cent to $244.64, giving it a market value of about $65 billion, while Laval, Quebec-based Valeant was unchanged. Valeant's market cap is closer to $43 billion.
Valeant set the low end of the bidding at about $200 a share when the company said on Oct. 27 that it is willing to bump its cash and stock offer - currently valued at about $180 a share - to that amount.
Allergan on Wednesday announced amendments to its bylaws, making it easier for shareholders to call a special meeting. Ackman had accused the Botox maker of having overly complicated bylaws that made it hard to call a shareholder meeting, now scheduled for December 18.
