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Allergan Taking Valeant To School On How To Buy Another Company

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Acquisitions should be amicable. They should not become an addiction used to hide how crummy your operating margins are, but used sparingly, like when you are trying to stave off the affections of a serial acquirer. And they should definitely not involve Bill Ackman or alleged insider-trading. Behold:

Allergan Inc., has approached Salix Pharmaceuticals Ltd. about a potential acquisition that could thwart a $53 billion hostile bid for Allergan by Valeant Pharmaceuticals International Inc., according to people familiar with the matter.

While it is unclear where the talks stand, Allergan could strike a takeover deal with Salix or another unknown party as early as next month, one of the people said….

A deal the size of Salix, which has a market value of just over $10 billion, could make it harder for Valeant and Mr. Ackman to acquire Allergan, given that it would make the company more expensive and complex.

Which is all very interesting for the dispassionate observer. It is apparently less interesting—and actually distressing—to a decent number of Allergan’s investors.

Of the company’s top 100 shareholders at the end of March, 76 sold some shares in the quarter. Four investors exited the stock entirely, and 10 sold more than 90% of their position, according to a review of the most recent quarterly filings compiled by S&P Capital IQ.

Allergan, Seeking to Fend Off Hostile Bid, Approaches Salix [WSJ]
Big Allergan Shareholders Pare Stakes as Valeant, Ackman Press Bid [WSJ MoneyBeat blog]