Allergan discloses a secret admirer looking to make an offer. Could it be ... Actavis?

Allergan's Irvine, CA, headquarters--Courtesy of Coolcaesar, CC BY-SA 3.0

Amid a heated takeover fight with Valeant ($VRX), Allergan ($AGN) says it's got a mystery suitor. But according to The Wall Street Journal's sources, it's not all that mysterious.

The potential white knight is Actavis ($ACT), the paper says, after reporting in September that the Ireland-based drugmaker had put up an all-cash bid for California-based Allergan. At the time, Allergan--convinced it could thwart Valeant's hostile bid with a pickup of North Carolina's Salix ($SLXP)--shot Actavis down, only to see those Salix deal talks stall.

Now, time is speeding toward a Dec. 18 special shareholders meeting. That's where Valeant partner Bill Ackman hopes to upturn Allergan's board in favor of his own deal-friendly slate of directors. Actavis may look like a great alternative this time around.

"We have been approached by another party regarding a potential transaction," Allergan said in Monday filing, keeping mum on the wannabe acquirer because its "board has determined that premature disclosure with respect to the possible terms of any transaction might jeopardize continuation of any discussions or negotiations."

But while Allergan may prefer Actavis to Valeant, with its merge-and-purge M&A strategy and business model, shareholders might feel differently. In September, three top-15 Allergan investors urged the company to delay any dealmaking until shareholders have their chance to weigh in on Valeant's offer.

Some Actavis investors aren't thrilled, either. They've had a little trouble swallowing the idea of a merger valuing Allergan above $200 per share, Sterne Agee analyst Shibani Malhotra wrote in a note last week. They worry that Actavis wouldn't be able to squeeze costs out of the combined company. But the way Malhotra sees it, the investors have nothing to worry about: Contrary to popular belief, a deal between the two is rife with overlap in dermatology, urology and neurology, three key areas for lead product Botox.

"Our discussions with industry contacts and Actavis' ability to drive synergies in prior transactions indicate that investors and the Street may be underestimating the operating synergies that can be achieved in the combined entity," she said.

- get the Allergan SEC filing
- see the WSJ story (sub. req.)

Special Reports: The most influential people in biopharma today - J. Michael Pearson, Valeant | 20 Highest-Paid Biopharma CEOs of 2012 - David Pyott, Allergan

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