Boston, MA 09/24/2014 (wallstreetpr) – The talks about a merger between Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) and Botox-maker, Allergan, Inc. (NYSE:AGN) have infuriated activist investor William Ackman, who has threatened to sue the later, if the deal finalizes.
Mr. Ackman is supporting and pushing the idea of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) acquiring Allergan. However, in this take-over battle between the trio, Allergan is not willing to submit itself to Valeant. It is making an effort to fail Mr. Ackman’s move by taking-over the North Carolina-based Salix itself. The two companies are as pointed out in the Wall Street Journal article, engaged in late stage merger talks.
Hedge Fund Pershing Square Capital Management LP’s owner, Mr. Ackman, has a stake of 10% in Allergan. He has threatened to sue the company if it enters into any sort of agreement with Salix without the consent of its shareholders. He wrote a letter to the company’s board yesterday saying that Allergan’s decision should require a shareholder vote. He based his argument on the pretext that Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP)’s acquisition would not allow its shareholders the freedom of choice between an independent company and a Valeant Pharmaceuticals Intl Inc (NYSE:VRX) take-over.
An Escape Route
Analyzing the matter deeply reveals that after acquiring Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP), Allergan would become too big, as well as complicated for Valeant Pharmaceuticals Intl Inc (NYSE:VRX) to purchase. This is because Salix’s market worth is over $10 billion. In addition, Allergan might not need shareholder consent for this deal because it plans to make the acquisition by using only cash. According to reports, Allergan will not use its stock in making this deal.
The proposed deal is speculated to have received the Obama administration’s support. On Monday, an announcement marked the introduction of new rules that aimed at discouraging “inversion” and overseas acquisitions which encourage tax savings. The new regulations could also help Salix spoil an agreement it had made with a division of Italy-based Cosmo pharmaceuticals SpA.