Fresh off signing up to buy Durata Therapeutics ($DRTX) for $675 million, Actavis ($ACT) is making another overture for the embattled Allergan ($AGN), Reuters reports, potentially setting up a bidding war with the dogged Valeant Pharmaceuticals ($VRX).
Actavis and Allergan have not yet had any formal discussions on a deal, Reuters' sources say, but the former company is prepared to mount a serious effort, according to the news service. And Allergan, in the midst of a protracted fight with Valeant Pharmaceuticals and its unwanted M&A advances, is reportedly willing to listen.
That spells a sudden change in tone for Allergan, which rejected a bid from Actavis back in August in favor of its own efforts to acquire Salix Pharmaceuticals ($SLXP) and, ideally, make itself too big for Valeant to bully. The plan was to quickly consummate that deal before a December shareholder meeting in which Valeant and co-agitator Pershing Square have a chance to depose most of Allergan's board, but the company's odds of pulling that off dwindled as some of its largest backers have requested a say in any such large deal.
And thus Allergan's best bet to escape Valeant--and its plans for spartan cost cuts--may be Actavis. Allergan will consider a proposal that tops $200 a share--roughly $63 billion in total--according to Reuters, a figure that would outstrip Valeant's current offer by nearly $10 billion.
That's a sizable premium for Actavis, but the company may be feeling some pressure of its own. Pfizer ($PFE), spurned in its earlier efforts to acquire AstraZeneca ($AZN) and lower its tax rate, is said to be taking a look at the Irish-headquartered Actavis with similar designs.
Meanwhile, Allergan's other suitor is hardly sitting on its hands. The New York Times reports that Valeant and Pershing are planning to raise their bid by $15 a share, which would bring the total offer to about $60 billion in cash and stock. And, as Reuters notes, some Valeant insiders believe the drugmaker's next earnings report, set for release on Oct. 20, is going to wow investors, potentially driving up the company's shares enough to vault its offer above that $200-a-share threshold in total value.