Business

Allergan, Ackman plot thickens with Salix salvo

Botox maker Allergan is leaving no stone unturned to resist a hostile takeover by Valeant Pharmaceuticals and its partner Bill Ackman.

In addition to suing Valeant and Ackman for insider trading, Allergan is also trying to find a white knight, according to a report on Tuesday.

The Irving, Calif., company has approached Salix Pharmaceuticals, a company one-quarter its size, according to the report. A merger of the two could act as a poison pill and thwart the Valeant-Ackman bid.

Allergan shares jumped 4 percent Tuesday, closing at $161.82, on the unconfirmed Wall Street Journal report of overtures with Salix, which jumped more than 13 percent , to $157.95.

Valeant also gained about 4 percent.

Allergan shares had been falling since Aug. 1, when it sued Ackman and Valeant for insider trading, another salvo in what has been dubbed the “scorchiest of scorched earth” campaigns.

On Wednesday, a California federal court will hear Allergan’s proposal to expedite the lawsuit. Ackman and Valeant, calling the suit “baseless,” oppose the fast track.

In addition, the Securities and Exchange Commission is believed to be looking into the insider-trading charges.

Bill AckmanReuters

The Salix report comes just days before Ackman is expected to announce his Pershing Square hedge fund has more than the 25 percent of shareholders required to demand a special meeting to consider ousting six of Allergan’s directors.

That would pave the way for a new board to accept Valeant’s $53 billion stock and cash offer.

Thirty-eight hedge funds and arbitrage desks jumped into Allergan during the second quarter, following Ackman. This investment bloc accounted for more than 30 percent of the shares as of June 30, according to regulatory filings, while Ackman, Allergan’s largest shareholder, owns 9.7 percent.

Two of the hedge funds that jumped into the fray — Viking Global Investors and Visium Asset Management — each reported on Aug. 8 that they’d taken a 5 percent stake in Salix.

Rumors that Allergan has been interested in Salix have permeated the market for months, according to sources.