Salix Rises to Record High on Report of Approach by Allergan

Aug 19, 2014 4:12 pm ET

(Updates with closing shares in second paragraph.)

Aug. 19 (Bloomberg) -- Salix Pharmaceuticals Ltd., maker of gastrointestinal treatments, rose to its highest value in almost 14 years after a report that Allergan Inc. approached it as an acquisition target.

Salix shares climbed 16 percent to close at $160.80 in New York, the highest price since November 2000, raising its market value to $10.2 billion, according to data compiled by Bloomberg.

Allergan Chief Executive Officer David Pyott said he is seeking acquisitions while attempting to fend off a takeover by Valeant Pharmaceuticals International Inc. The Wall Street Journal earlier today reported that Irvine, California-based Allergan had approached Salix and at least one other company.

Salix is merging with Italian drugmaker Cosmo Pharmaceuticals SpA. The $2.7 billion deal, expected to close by the end of 2014, will allow Raleigh, North Carolina-based Salix to move its tax address to Ireland.

Scott Bisang, a representative for Allergan at Joele Frank, declined to comment. Lekha Rao, a representative for Salix with Teneo Strategy, also declined to comment.

Shares of Jazz Pharmaceuticals Plc, based in Dublin, rose 2.9 percent to close at $156.87. Jazz makes narcolepsy, psychiatry and oncology drugs. It has been speculated as a takeover target and, with its $9.5 billion market capitalization, may be within Allergan’s reach.

Valeant’s takeover bid for Allergan, backed by activist hedge-fund manager Bill Ackman, has become increasingly acrimonious. Allergan has sued Valeant and Ackman’s fund Pershing Square Management LP for insider trading. Meanwhile, Ackman is seeking a special meeting or shareholders to add six new members to Allergan’s board and help push through a deal.

--With assistance from Cynthia Koons in New York.