Will Allergan Buy Its Way out of a Takeover?

Spending billions to save hundreds (of jobs)

Michael Douglass
Michael Douglass and Dave Williamson
Apr 29, 2014 at 7:13PM
Health Care

There has been no shortage of drama relating to Valeant Pharmaceuticals' (NYSE:BHC) proposed takeover of Allergan (UNKNOWN:AGN.DL). Valeant's proposed takeover is estimated to generate a potential $2.7 billion in cost savings for the combined company, in part by slashing Allergan's spending on R&D and administration (and presumably jobs in those departments).

In a move that bids to protect those jobs by keeping Allergan independent, Allergan's board immediately implemented a poison pill to prevent the takeover. Will the poison pill be enough to stop Valeant, especially given that the company is supported by Bill Ackman, whose firm owns over 9% of Allergan shares?

Speculation has swirled that Allergan might try another option -- an acquisition to boost its size beyond Valeant's ability and willingness to buy. Shire (NASDAQ:SHPG) is a big potential target. Find out why in the video below.