Hedge fund manager Paulson & Company believes now is a good time for Allergan to bid on its fellow pharmaceutical company Shire, both companies that Paulson has stakes in. A representative of Paulson contacted Allergan Chief Executive David Pyott last week to make the push to buy. Paulson has a 2 percent stake in Allergan and a 4.5 percent interest in Shire.
The impetus for the shopping spree was the collapse of the deal which AbbVie had to purchase Shire. The merging of the two giant drug companies was severed after the Treasury Department amended the rules of tax inversions, making the deal look considerably less sweet to AbbVie, which consequently backed out. News of the merger’s demise sent Shire’s stock south, causing Paulson to absorb some pretty painful paper losses. Solution: find another buyer for Shire, for instance Paulson’s own Allergan.
As luck would have it, Allergan, in an attempt to discourage a hostile bid for them by Valeant Pharmaceuticals and the hedge fund Pershing Square Capital Management, would like to make a purchase of its own. Allergan has thought about an all-cash buy of Salix Pharmaceuticals, but those negotiations broke down. They have also considered having another drug company, Actavis, purchase them at a better price than what Valeant and Pershing offered.
Despite the fact that Allergan thought about bidding on Shire earlier this year, any interest seems to have died down. The most likely deal in Allergan’s future is the one with Actavis, say people in the know.
