Allergan: Expect Takeover Sooner Rather Than Later, Citigroup Says

Earlier today, the Wall Street Journal reported that Allergan (AGN) had discussed taking over Salix Pharmaceuticals (SLXP), as it attempts to keep Valeant Pharmaceuticals International (VRX) at bay.

Reuters Allergan Chief Executive David Pyott

Citigroup’s Liav Abraham thinks Allergan will make a move sooner rather than later:

It is unclear whether Salix is a willing seller ahead of its pending acquisition of Cosmo (a tax inversion transaction), which is expected to close in 4Q14. If Allergan is indeed interested in Salix, we believe that an attempt to acquire the company will be made prior to closure of the Salix-Cosmo transaction, as we do not believe that Allergan is likely to pursue a tax inversion transaction over the near term due to the associated requirement to issue stock, which would in turn require a shareholder vote, thereby delaying, and potentially complicating, the acquisition process.

The Wall Street Journal also said Allergan had approached another, unnamed company. Abraham makes his best guess:

The other company referred to could be Actelion, in our view, due to Actelion's presence in high-growth specialty areas (cardiovascular/respiratory), with Opsumit in its launch phase selexipag recently de-risked following positive Phase III headline results. We note that Actelion management has indicated its intent to remain independent.

Shares of Allergan gained 4% to $161.82 today, while Salix Pharmaceuticals surged 16% to $160.80 and Valeant Pharmaceuticals advanced 3.6% to $113.72.