Botox maker Allergan Inc (AGN) is seeking acquisitions to preempt a hostile bid by Canada-based Valeant Pharmaceuticals International Inc (VRX, VRX.TO).
The company has approached Salix Pharmaceuticals Ltd (SLXP) and another firm for possible deals, the Wall Street Journal said, adding that a deal with Salix could occur as early as September.
Meanwhile, Salix, based in Raleigh, North Carolina, is merging with a unit of Italy's Cosmo Pharmaceuticals as part of a tax-inversion deal. Tax inversion is the process of moving a company's headquarters overseas to benefit from cheaper tax rates.
It's not clear if Allergan, based in Irvine, California, would buy the Cosmo unit as well, the Wall Street Journal said.
Allergan shares closed the day's session up 1 percent, while Salix jumped 11 percent.
In April, Valeant along with billionaire investor William Ackman's hedge fund Pershing Square made a hostile bid to acquire Allergan for $46 billion in cash and stock. Pershing Square is the largest shareholder in Allergan with a 9.7 percent stake.
Allergan's board rejected the offer, stating that it created huge risks for its stockholders and was not in the best interests of the company.
In May, Valeant sweetened its bid for Allergan to about $53 billion, but the offer was again spurned. Allergan called Valeant's business model unsustainable and said that a deal with Valeant would hurt its research and development program.
On Aug. 1, Allergan filed a lawsuit against Valeant and William Ackman on charges they violated securities laws prohibiting insider trading, engaged in other fraudulent practices, and failed to disclose legally required information.
Salix stock closed Tuesday at $160.98, up $21.81 or 15.67%, on a volume of 6.3 million shares on the Nasdaq. In after hours, the stock dropped $1.37 or 0.85%.
Allergan stock closed Tuesday at $161.82, up $6.21 or 3.99%, on a volume of 3.7 million shares on the NYSE.
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