UPDATE 2-Ackman working with Valeant to press for Allergan takeover

Mon Apr 21, 2014 6:21pm EDT
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(Adds analyst comments, details from filing, paragraphs 6-8, 16-20)

By Svea Herbst-Bayliss, Rod Nickel and Olivia Oran

BOSTON/NEW YORK, April 21 (Reuters) - Activist investor William Ackman has acquired a nearly 10 percent stake in wrinkle-treatment maker Allergan Inc and is working with Valeant Pharmaceuticals International Inc to buy the company, sources said on Monday.

Ackman's Pershing Square, a $13 billion hedge fund, spent roughly $4 billion on acquiring the stake, its biggest-ever investment which comes less than a year after the hedge fund took a stake in Air Products & Chemicals.

Pershing Square began buying stakes in Allergan in February, according to a regulatory filing, with money it had freed up by trimming its stake in Beam and getting out of General Growth Properties, one of its biggest winners ever.

Valeant, a Canadian pharmaceutical company known for skin care products and generic drugs, has been on a buying spree and most recently acquired Bausch & Lomb Holdings.

It has been eager to make a bid for Irvine, California-based Allergan for over a year but has been turned away, a source familiar with the matter said.

In the regulatory filing, Ackman said Valeant will pay with a combination of stock and cash and expects the cash component to total around $15 billion. Barclays and Royal Bank of Canada have said they are ready to help with financing.

A Valeant spokesperson said that a merger with Allergan would create an "unrivaled platform for growth and value creation," and said that the company would soon finalize its proposal and then announce it.   Continued...