Actavis is in talks with another drug maker about a potential merger after talks with Valeant Pharmaceuticals fell through.
Actavis, which makes generic drugs, said on Friday that it was in early stage talks with Warner Chilcott, adding that no agreement has been reached. The announcement was welcome news for Actavis investors after the collapse last month of talks over a sale to Valeant.
Shares of Actavis surged 12.2 percent on Friday, closing at $119.86. Warner Chilcott’s stock rose almost 20 percent, to $18.01.
By engaging with Warner Chilcott, Actavis is looking to acquire a smaller company rather than sell itself to a bigger rival. A combination with Valeant would have been one of the biggest health care deals of the year.
Actavis, which is based in Parsippany, N.J., has a market capitalization of $15.3 billion after the rise on Friday. Warner Chilcott, based in Dublin, has a market capitalization of $4.5 billion as of the end of trading on Friday.
Warner Chilcott, which sells branded drugs, explored a possible sale last year, but no deal ultimately materialized.
The biggest shareholder of Warner Chilcott is Fidelity Management and Research, the mutual fund company, with a 10 percent stake as of Thursday, according to Bloomberg data. Fidelity is the second-largest shareholder of Actavis, with a stake of 5.7 percent, the data shows.
