Allergan Bid Adds to Flurry of Pharmaceutical Deals

The early pairing of the hedge fund manager William Ackman with Valeant Pharmaceuticals International to bid for the Botox maker Allergan allows Mr. Ackman to leapfrog over a traditional step for activist investors.

It is also the latest sign of investors’ growing appetite for pharmaceutical deals.

Mr. Ackman had teamed up with Valeant as his hedge fund, Pershing Square Capital Management, began acquiring Allergan stock two months ago just below the threshold where he would have to report the stake to the Securities and Exchange Commission.

The pairing of Mr. Ackman, a standout among activists for his particularly aggressive tactics, with a potential acquirer is unusual for activist investors, who typically buy large chunks of a company before agitating for change. But Valeant had already been trying to acquire Allergan to no avail, according to its announcement of the proposed bid.

“We would have preferred to negotiate this transaction in a confidential manner, but given that Allergan has not been receptive to our overtures for over 18 months and has made it clear both privately and publicly that it is not interested in a deal with us, we chose to present this proposal to Allergan shareholders directly,” the company said in a statement on its website on Tuesday.

Allergan’s favorable tax rate â€" it is based in Canada â€" and focus on dermatology and opthamology could present significant benefits to Valeant, according to Liav Abraham, an analyst who covers the specialty pharmaceutical industry for Citigroup.

“Any company can extract a lot of synergies out of the deal,” Ms. Abraham said. She said that Allergan’s opthamology and dermatology units, two of its core operations, have “sustainable,” double-digit growth potential.

Excluding the potential bid for Allergan, mergers and acquisitions in the pharmaceutical industry totaled $47.1 billion so far this year, the highest year-to-date total since 2009, according to data from Thomson Reuters. Those include the agreement by Actavis in February to buy Forest Laboratories for $25 billion.

Those transactions also account for 4.6 percent of all mergers and acquisitions by value so far in 2014, up from 2 percent at the same time last year.

Pharmaceutical companies may be looking to grow through acquisitions, and many drug makers are sitting on cash after paying down debts from the boom that preceded the credit crisis.

On Tuesday, Novartis and GlaxoSmithKline announced more than $20 billion in transactions, including an agreement for Novartis to buy the cancer drug business of its rival for up to $16 billion.

While Craig Sterling, the head of global research for EVA Dimensions, pointed out that the $45.6 billion offer for Allergan represents a 31 percent premium over the company’s current unaffected stock price of $116.63, he said that those figures do not represent an enormous premium when compared with the larger industry.

“Valuations are up for the whole group over the last few years,” Mr. Sterling said. “Allergan isn’t getting any premium above and beyond what the others are trading at. You’d think in a takeover they’d get more.”

Mr. Ackman and Valeant may still face hurdles to close a deal, including scrutiny by the Federal Trade Commission, according to Ms. Abraham.

Allergan, for example, has one of its fiercest rivals in Valeant. Valeant bought Medicis, an pharmaceutical company based in Arizona that manufacturers Dysport, a competitor to Botox, for about $2.6 billion in 2012.

That price represented a 39 percent premium over Medicis’s stock.

Additionally, the bid for Allergan, which includes a mixture of cash and stock, may face objections from the company’s board. While the company issued a statement on Tuesday saying that it intends to “carefully review and consider the proposal,” some analysts said they expected the company to resist any takeover efforts.

“To agree to this deal, you have to agree to take Valeant’s stock,” Ms. Abraham said. “The question is, do you want to take Valeant’s stock? And then the question there is, do you want Valeant managing these wonderful assets I’ve been talking about?”