Salix drops Cosmo buy, opting to talk takeover with Actavis

Chalk up a victory for the U.S. Treasury Department, whose new rules put the kibosh on Salix Pharmaceuticals' ($SLXP) tax inversion deal for Cosmo's ($COPN) Irish unit. Instead, the North Carolina company is reportedly in talks to sell itself--but to Actavis ($ACT), not Allergan ($AGN).

Salix CEO Carolyn Logan pointed a finger at the "changed political environment" Friday, becoming the first U.S. pharma company to scrap its inversion plans in the face of the tougher rules handed down last month. They "created more uncertainty regarding the potential benefits" Salix expected to achieve through a Cosmo buy, she said in a statement.

But that doesn't mean Salix is walking away from the M&A table. Amid rumors that both Actavis and Allergan have their eyes on the drugmaker, talks with the former are reportedly heating up.

While CNBC last week reported that discussions with Allergan--which has been scouting for deals to thwart a hostile bid from Valeant--had been going on seriously for weeks, the tables have turned since then, Bloomberg reports. Though no deal is imminent, a pact between Salix and Actavis has become more likely, with Allergan's efforts stalling, Bloomberg's sources say.

That news may delight some of Allergan's largest shareholders, who recently voiced concerns that the company's focus on "hastily closing a large acquisition" would scare off its prospective suitors. In addition to Valeant Pharmaceuticals ($VRX), which has been pursuing the Botox-maker for months, Actavis itself made an offer back in August.

And speaking of suitors, Actavis hasn't been lacking them lately, either. In September, Bloomberg confirmed speculation that Pfizer ($PFE), once-spurned by AstraZeneca ($AZN), was shopping the New Jersey company.

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