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Ahead of the Bell: Allergan soars on deal reports

November 17, 2014

Shares of Allergan jumped in premarket trading Monday after several reports surfaced over the weekend that specialty drugmaker Actavis was preparing to buy the Botox maker, which is fighting off a separate takeover bid from Valeant Pharmaceuticals.

The New York Times reported that Allergan is nearing a deal to sell itself to Actavis for more than $62.5 billion. That would top an offer of about $53 billion put together by Valeant and Bill Ackman’s hedge fund Pershing Square Capital Management, which has built a large stake in Allergan.

Representatives of Actavis did not immediately return calls seeking comment from The Associated Press.

Citing anonymous sources, the Times reported that Actavis would pay more than $210 per share in cash and stock for each Allergan share.

That would top the most recent offer from Valeant and Pershing Square, which totaled about $179 in cash and stock when it was made at the end of May.

Irvine, California-based Allergan Inc. has resisted for months the unsolicited bids of Canada’s Valeant Pharmaceuticals International Inc. It adopted a “poison pill” antitakeover measure right after Valeant’s first bid last spring.

It also has questioned Valeant’s business model, which relies on acquisitions for growth, and its cost-cutting plans. Valeant has said it is committed to funding important research.

The companies have taken their takeover battle to federal court, and Allergan faces a Dec. 18 shareholder meeting at which its stock owners will have a chance to vote out most of its board. A federal judge decided earlier this month that Pershing Square can vote in that meeting, but Allergan has said it would appeal that decision.

In shunning Valeant, Allergan would be favoring another drugmaker that leans heavily on acquisitions. In July, Actavis completed a $28 billion deal for fellow drugmaker Forest Laboratories. Last year, it bought Ireland’s Warner Chilcott for $8.5 billion and moved its headquarters to Dublin from Parsippany, New Jersey. That came a year it merged with generic drugmaker Watson Pharmaceuticals.

Actavis also announced another deal update on Monday. It said it completed its offer to buy all outstanding shares of Durata Therapeutics Inc. in a deal worth about $675 million.

Shares of Allergan climbed $8.35, or 4.2 percent, to $207 in premarket trading about an hour before markets opened Monday. The stock had already jumped about 79 percent so far this year, as of Friday’s close. U.S.-traded shares of Actavis rose 23 cents to $244.

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