Bill Ackman's Big Pharma Deal Could Be Ruined Tomorrow

NEW YORK (Reuters) - Allergan Inc is near making a friendly deal with Actavis Plc , the Wall Street Journal reported on Sunday, citing people familiar with the matter.

The boards of the two companies are expected to meet to review a cash-and-stock deal, and an agreement could be announced as early as Monday, according to the report.

The deal would impact far more than merely the two companies involved. Hedge fund manager Bill Ackman, of Pershing Square, owns almost 10% of Allergan. As the company's biggest shareholder he's been pushing for it to accept a hostile takeover bid by Canadian pharmaceutical company, Valeant.

A deal between Actavis and Allergan would spoil that deal.

Allergan has been resisting Valeant and Ackman's advances since Ackman's stake in Allergan - and intention to push the merger - was announced in April.

Since then Allergan has argued that Valeant is not a good match for it, and charged that Valeant is a company built by its serial acquisitions with no organic growth. Wall Street's most famous short seller, Jim Chanos, has also made that argument about Valeant.

Allergan has also accused Bill Ackman and Valeant of insider trading. Back in February Ackman started buying Allergan shares with Valeant's knowledge and the intention to try to acquire the company - a violation of insider trading rules, says Allergan.

A Judge in California agreed that those allegations may be true, but is letting Ackman use his 10% stake in any vote related to the Allergan-Valeant deal at a board meeting on Dec. 18th.