Names that have been bandied about as potential Allergan targets include Jazz Pharmaceuticals PLC, which is based in Ireland but operates out of Palo Alto, and Salix Pharmaceuticals Ltd., which operates out of Raleigh, N.C.


Salix was back in the picture last week after investor-website reports said some of its larger shareholders wanted it to back out of a proposed tax inversion deal for Cosmo Pharmaceuticals SPA, which primarily operates in Italy, in favor of selling itself to a larger company such as Allergan. The reports indicated that investors controlling at least 25% of Salix’ shares, which had a market value of just under $10 billion last week, were threatening to block the Cosmo deal.

Allergan declined comment on the buzz about Salix and other speculations.

Valeant could not be reached for comment.

One veteran analyst, David Maris, who follows Allergan for New York-based BMO Capital Markets, painted a more robust picture of Allergan’s prospects for independence last week.

“We continue to think Allergan is in the catbird seat with multiple deal options,” Maris said in a report issued after a meeting with Allergan Chief Executive David Pyott and Dr. Scott Whitcup, executive vice president of research and development.

Allergan is in “no rush to get a deal done” prior to a Dec. 18 special meeting, wrote Maris.

At the meeting, shareholders will vote for Valeant and Ackman’s proposal to remove a majority of Allergan’s board.

The analyst said that Pyott and Whitcup indicated that some shareholders who have gone along with the call for the special meeting will nonetheless vote in favor of Allergan remaining independent. Maris concurred with that outlook after conducting follow-up discussions with others.

“Based on our discussion with several holders, we believe that we have independently confirmed that there are holders participating in the meeting who state to us they intend to vote against Valeant’s measure,” he said.

Maris reiterated his view that Allergan shareholders “should reject the Valeant offer, for the value and the uncertainty of the stock component, especially given Valeant’s debt levels, IRS audit and a potential SEC investigation reported by several news outlets.”

Aversion to Inversion

The analyst said Pyott emphasized that any acquisition by Allergan would be driven by strategy rather than an opportunity to lower corporate taxes. The chief executive told Maris that large “tax arbitrage is likely not sustainable” via inversion deals and that the federal government will eventually crack down on the practice.