|Actavis CEO, Brent Saunders|
Allergan ($AGN), Salix ($SLXP) and Omega are all reportedly in Actavis' dealmaking sights, but which will the drugmaker go after? With an active M&A track record and deal veteran Brent Saunders at the helm, some analysts think the company could lock down more than one--but it won't necessarily be easy.
In just three months in the CEO's chair, Saunders has put Actavis ($ACT) in the middle of nearly $70 billion worth of potential buys, Bloomberg reports. But considering the year he's had--selling Bausch + Lomb to Valeant ($VRX), nabbing Aptalis for Forest and then selling Forest to Actavis--that may not surprise some industry-watchers. Actavis has been around the block when it comes to mergers, too: Born of a deal with Watson Pharmaceuticals, the company has been the most active drug-company buyer since January 2011, the news service's data says.
So what's next? "They've had success with small deals, they've had success with larger deals. I'd expect them to do both," Gabelli & Co. analyst Kevin Kedra told the news service.
On the larger-deal side, Allergan's name has certainly been floating around. Actavis reportedly approached the California pharma about hooking up last month, only to have the Botox-maker shoot it down, confident it was close to its own agreement with Salix, a company that Actavis also has a rumored interest in. But Saunders has told Allergan CEO David Pyott that he's open to discussing a merger, and the two know each other and communicate regularly, Bloomberg's sources say.
That's not to say Actavis would get an open shot at the company. Valeant and leading Allergan shareholder Bill Ackman have been pursuing a hostile bid for months, and they may have a chance to advance that deal after a December shareholder meeting. And while Actavis could offer some of Canada-based Valeant's tax benefits thanks to last year's buyout of Ireland-based Warner Chilcott, it wouldn't be able to match the M&A machine's proposed cost cuts and synergies, the news service notes.
Even if Actavis does manage to nab Allergan, it should be able to do some smaller deals, too, Kedra said. Those could include tie-ups with North Carolina-based Salix, valued at about $8.6 billion, or $5 billion Omega Pharma of Belgium. But even those could come with their fair share of competition. Earlier this week, for instance, reports listed Sanofi ($SNY) and Perrigo ($PRGO) as other potential Omega suitors.
And let's not forget that Pfizer ($PFE) may have a mind to make Actavis the acquired rather than the acquirer. In September, amid swirling rumors, Bloomberg reported that Pfizer was indeed shopping the company as a backup in the event that it didn't make a second play for AstraZeneca ($AZN).
With all the possibilities on the table, it may be a little while before Actavis' intentions are crystal clear. But one thing is for certain, CRT Capital Group Tim Chiang told Bloomberg. As he works to merge Actavis' generics firepower with Forest's specialty products into a single industry heavyweight, Saunders "definitely knows the drug business, and what he wants, and where he wants to grow."
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