Another Allergan (NYSE:AGN) investor has spoken out against the company's pursuit of a costly purchase to fend off Valeant's (NYSE:VRX) $54B takeover bid.
Jackson Square, the eighth largest investor in Allergan, now joins T. Rowe Price (NASDAQ:TROW), announcing its dissatisfaction with the newly proposed acquisition.
This past week, Allergan was reported to be "in advanced talks" to buy Salix (NASDAQ:SLXP) in an all-cash deal after turning down an offer from Actavis (NYSE:ACT).
“We appreciate the perspectives of our stockholders,” Allergan says in an e-mailed statement. “Allergan’s Board remains confident in the company’s ability to deliver significantly more value than Valeant’s grossly inadequate offer.”
Market buzz is building about Actavis (ACT +2.1%) making a move for Salix Pharmaceuticals (SLXP -0.2%) which would submarine Allergan's (AGN +3.7%) reported acquisition plans as a tactic to thwart Valeant (VRX +6.9%).
Actavis itself is supposedly a takeover target of Pfizer (PFE +1%).
Pfizer (PFE -0.6%) approached Actavis (ACT +3.3%) to "express its interest in an acquisition," sources tell Bloomberg. However, the news service adds the companies "aren’t currently in formal talks and Pfizer hasn’t made an offer."
Actavis has spiked on the report. Pfizer, interested in doing a tax inversion deal, made a rejected bid to acquire AstraZeneca earlier this year. Actavis was reported yesterday to have made a rejected offer for Allergan (AGN +1.4%), which is reportedly in advanced talks to buy Salix.
Yesterday, the Treasury Department announced it's close to finalizing rules meant to discourage U.S. companies from doing inversion deals.
Some large Salix Pharmaceuticals (NASDAQ:SLXP) shareholders would rather the company back out of its proposed acquisition of Cosmo Pharmaceuticals and try to sell itself to a larger pharma company like Actavis (NYSE:ACT) or Allergan (NYSE:AGN). Investors controlling at least 25% of SLXP shares are threatening to vote down the deal. A majority must approve it for it to proceed.
They believe that an inversion deal with Cosmo will make it more difficult to find a buyer for Salix, whose market cap is just shy of $10B.
Under the terms of the merger, Salix shareholders would own 80% of a jointly-held Irish unit and Cosmo the rest. If Salix backs out, it would have to pay a relatively-modest $25M break-up fee.
Salix has had a good year in 2014. Shares are up 73% year-to-date.
Barron's Ben Levisohn believes that AstraZeneca (AZN +0.7%) remains a solid target for Pfizer (PFE +0.9%) citing the tax inversion appeal, the ability to free up its ex-U.S. cash and AZN's robust pipeline.
He also believes Actavis (ACT -0.2%) is an equally compelling target due to its lower risk and good fit with Pfizer's Global Established Product unit while offering the tax inversion pathway and access to ex-U.S. cash as well.
The Federal Trade Commission has given U.S. antitrust approval to Akorn's (NASDAQ:AKRX) acquisition of prescription drug-maker VersaPharm on condition that Akorn sell its rights to make a generic version of the tuberculosis drug rifampin.
Reuters reports that generic drug firm Mylan (MYL -1%) is in advanced negotiations with Abbott Laboratories (ABT +0.1%) to purchase a multibillion dollar portfolio of its established off-patent Europe-based drugs. The transaction is a tax inversion deal that will enable Mylan to redomicile in Switzerland.
Mylan has been in the hunt for foreign assets since its failed attempt to buy Swedish drugmaker Meda AB earlier this year. Its two main competitors, (TEVA +0.9%) and Actavis (ACT +0.5%) are domiciled in lower tax countries.
Abbott will use the proceeds of the sale, rumored to be as high as $5B, to invest in higher growth opportunities.
Following a bit of skepticism from BMO yesterday about its $25B acquisition of Forest Labs (FRX), Actavis (ACT) gets some sell-side love as several firms give the latter a price target of $250, well above its close of $201.47.
Goldman Sachs upgrades Actavis to Buy, saying the company is rapidly transforming into one of the fastest-growing names in their coverage.
And while Buckingham and Barcap set price targets of $250, their upside cases are $274 and $275 respectively.
BMO: "We acknowledge the deal frenzy and EPS accretion deal environment, but are not convinced that such a deal makes strategic sense."
Citi: "The potential combination of the two companies is somewhat surprising in our view, given their relatively limited overlap." Cit's note goes on, though: "However we acknowledge that their combination would better facilitate negotiation amongst a customer base that is also experiencing consolidation.”
Notwithstanding, Actavis' shares are +11.3%, although down from earlier highs, while Forest is +33%.
Actavis (ACT) has agreed to sell its generic-drug operations in seven western-European countries to India's Aurobindo Pharma for around €30M ($41M).
The countries are France, Italy, Spain, Portugal, Belgium, Germany and Holland.
"This transaction will permit Actavis to focus management time and resources to support accelerated investment in driving faster growth of other markets, including Central and Eastern Europe and Southeast Asia," Actavis said.
News of the deal comes after Actavis said it intends to end its presence in China due to the difficult business climate. (PR)
The FTC approves Actavis' (ACT) acquisition of Warner Chilcott (WCRX).
As part of the deal, ACT will divest Zenchent Fe, an application for a generic version of Lo Loestrin Fe, an application for a generic version of Atelvia, and an approved application for generic Loestrin 24 Fe. (PR)
Actavis (ACT) and Warner Chilcott (WCRX) receive a request for additional information from the FTC in connection with Actavis' $8.5B acquisition of Warner Chilcott. The request will extend the waiting period for a decision from the FTC until 30 days after the companies have complied with it, although they still expect to complete the deal in H2. (PR)