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Allergan pays $560M for drug maker Naurex as deal talk swirls

Allergan is considering a breakup of the company into two businesses, a person familiar with the matter told Reuters on Friday, potentially adding the botox-maker to a list of large drugmakers realigning themselves to focus on specific areas of their businesses.

As speculation about the company mounted, Allergan announced on Sunday it would buy Illinois-based Naurex, a privately held developer of treatments for depression, paying $560 million up front.

"The acquisition of Naurex is a great fit for Allergan and a compelling and exciting investment," Brent Saunders, CEO of Allergan, said in a statement. "We expect Naurex will enhance Allergan's mental health portfolio and build on our strategy to lead in this important therapeutic area."

Allergan is considering keeping its branded drugs business but spinning off or selling parts or all of its generics business, according to the person who asked not to be identified because the deliberations are confidential.

Who else is Allergan bringing to the dance?

A clinical technician holds a syringe and a vial of Allergan Botox, produced by Allergan.
Jason Alden | Bloomberg | Getty Images
A clinical technician holds a syringe and a vial of Allergan Botox, produced by Allergan.

However, Teva Pharmaceutical Industries Ltd is in advanced talks to buy Allergan generic drug business following a thus far unsuccessful effort to acquire peer Mylan NV, according to a person familiar with the matter.

Jerusalem-based Teva, which has offered to buy Mylan for $40 billion, is now close to an agreement to acquire Dublin-based Allergan's generic drugs unit for between $40 billion and $45 billion, the person said on Saturday.

Just eight months ago the Botox-maker formed a multibillion dollar pharmaceutical company through a merger with Actavis.

Large drug makers are trying to realign their business to focus on a small number of leading businesses while smaller specialty and generic producers are seeking larger scale.

Last year, Abbott Laboratories sold its specialty and branded generics business in developed markets to Mylan for $5.3 billion while Bayer acquired Merck's consumer care business for $14.2 billion.

GlaxoSmithKline and Novartis said they had completed a series of asset swaps worth more than $20 billion that will reshape both companies.

Novartis also sold its animal health unit to Eli Lilly for $5.4 billion in 2014.

Allergan's shares were up 4.7 percent in extended trading after closing at $308.21 on Friday.

Allergan's branded drugs business makes products such as Botox and Alzheimer's drug Namenda, while its generics business makes up about a third of the company's total revenue.

The news was first reported by Bloomberg, which said that the discussions were still taking place and there was no certainty that a spin-off or breakup would occur.

Representatives for Allergan could not be reached immediately for comment.

Actavis outbid Canadian drugmaker Valeant Pharmaceuticals International and activist investor William Ackman in November to form a $121 billion pharmaceutical company with Allergan.

--CNBC.com contributed to this article.