According to people close to the matter, Allergan is holding early-stage discussions with Sanofi and Johnson & Johnson about a possible merger as it considers alternatives to a recent unsolicited bid to be bought out by Valeant Pharmaceuticals and activist investor William Ackman's Pershing Square Capital Management, Bloomberg reported Tuesday. The report also cited another source saying that investment banks have contacted Bayer to gauge whether it is interested in buying Allergan.
The sources indicated that while Sanofi and Johnson & Johnson are evaluating their options, it remains unclear if either company would pursue an Allergan takeover. The people also said Allergan, which adopted a poison pill defence after the joint offer from Valeant and Pershing Square was announced, has not decided how to respond to the proposal to exchange each of its shares for $48.30 in cash and 0.83 shares of Valeant common stock, valuing the company at over $45 billion.
With regard to Bayer, the source noted that the German company is focused on trying to win an auction for Merck & Co.'s over-the-counter medicines unit, which could fetch up to $12 billion.
Spokespeople for Allergan, Sanofi, Johnson & Johnson and Bayer all declined to comment on the speculation. For related analysis about Valeant's bid, read ViewPoints: Valeant's move for Allergan redefines specialty pharma M&A expectations.
Meanwhile, another report citing people familiar with the matter suggested Allergan was preparing to approach Shire for a second time about a potential takeover, after the first was rejected earlier this year. The company reportedly held talks in recent months with the Irish drugmaker that ultimately fell through, but one unnamed source said Allergan could table another offer as soon as in the next few days. However, the sources cautioned that the plan is not yet finalised and could still change.
Analysts speculated last week that Allergan could make a possible bid for Shire in an effort to thwart Valeant's advances, with Piper Jaffray analysts saying that acquiring Shire was its "most realistic hope" at fending off the hostile pursuit. Industry observers had also suggested that an Allergan acquisition of Shire could allow it to move its tax base to Dublin and lower its corporate tax rate.
Analysts project that Allergan's sales will grow every year, reaching $9 billion in 2018, from $6.3 billion last year.
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