Allergan approached Shire about takeover but rebuffed: sources
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[April 25, 2014]
By Olivia Oran, Soyoung Kim and Nadia
NEW YORK (Reuters)
— Allergan Inc
approached Shire Plc in recent months about a possible takeover but
was rebuffed, according to people familiar with the matter, in the
latest example of a U.S. drugmaker seeking to buy an overseas rival
to lower its tax rate.
The preliminary approach for Shire, which is based
in Ireland and has a market value of $33 billion, did not progress
to serious discussions between the two companies, the sources said.
Since then Allergan has received an unsolicited $47 billion takeover
offer from Valeant Pharmaceuticals International Inc teamed up with
activist investor Bill Ackman's Pershing Square Capital Management.
Analysts have suggested one way for the Botox maker to defend
against the unsolicited bid would be to acquire foreign drugmakers
such as Shire, Jazz Pharmaceuticals Plc or Alkermes Plc.
One of the sources said it was unclear if Allergan would try to
revive talks with Shire, or pursue another target as a means to
Representatives for Allergan and Shire declined to comment.
In a process known as inversion, U.S. drugmakers are looking to
relocate their headquarters to other countries with lower tax rates.
These companies are eying potential targets that are based in
Ireland in particular because of a low 12.5 percent corporate tax
rate, compared to 35 percent in the United States.
Recent deals that have been driven by tax advantages include generic
drugmaker Actavis Plc's $8.5 billion acquisition of Dublin-based
Warner Chilcott and Perrigo Company Plc's $8.6 billion acquisition
Generic drugmaker Mylan Inc is also looking at acquisition targets
that are based outside of the United States because of competitive
pressures from rivals with a less burdensome tax structure, people
familiar with the matter said.
Valeant's offer for Allergan comes amid a flurry of healthcare deals
this week including medical device company Zimmer Holdings Inc's
$13.4 billion acquisition of rival Biomet; a $20 billion asset swap
between Novartis AG and GlaxoSmithKline Pharmaceuticals PLC; and Eli
Lilly and Co's acquisition of Novartis' animal health business for
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Those deals have driven healthcare M&A volumes to $153.3 billion
so far this year, the highest year-to-date level since Thomson
Reuters has started tracking data. Pharmaceutical deals have
accounted for 71 percent of overall healthcare deals.
Valeant has been on a buying spree since 2010 and last year acquired
contact lens maker Bausch & Lomb Holdings. Chief Executive Michael
Pearson said in January the drugmaker wants to become one of the
world's top five pharmaceutical companies by market capitalization
by the end of 2016, largely through acquisitions.
Pearson said on Tuesday Allergan Chief Executive David Pyott and the
company's board had been unwilling to discuss a merger with Valeant.
In a letter to Allergan, Valeant said it would have preferred to
negotiate a deal in private.
Allergan said in a statement on Tuesday that it has received the
offer, and will carefully consider the proposal and "pursue the
course of action that it believes is in the best interests of the
(Reporting by Olivia Oran, Soyoung Kim and Nadia Damouni in New
York; editing by Lisa Shumaker, Bernard Orr)
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