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Allergan, the maker of Botox with a market capitalization of nearly $50 billion, is trying to stay independent. It held talks in recent months with Shire about a potential takeover that did not pan out, Reuters reported last week.

The U.S. dermatology drugmaker, which has since received a $47 billion takeover offer from Valeant teamed up with activist investor Bill Ackman, is still interested in a tie-up with Shire and planning a fresh approach to the $32 billion Irish drugmaker, said the people familiar with the matter.

Allergan could come back for a bid as soon as in the next few days, one person added. The plan has yet to be finalized and could change, cautioned the people, who asked not to be named because the matter is not public.

A representative of Allergan declined to comment, while Shire could not be immediately reached for comment.

A combination of Allergan and Shire would create a pharmaceutical giant with a combined market value of nearly $72 billion and annual sales of more than $11 billion.

Buying Shire would also help Allergan in its defense against Valeant, and Allergan could use Dublin-based Shire as a vehicle for a tax inversion deal that would lower its tax rate.

Shire had rebuffed Allergan's deal overture earlier this year, people familiar with the matter told Reuters last week, and it is not clear if the drugmaker would be open to entering into merger discussions.

In a process known as inversion, U.S. drugmakers seek to relocate their headquarters to other countries with lower tax rates. These companies are eying potential targets that are based in Ireland in particular because of a low 12.5 percent corporate tax rate, compared to 35 percent in the United States.

Generic drugmaker Mylan Inc (MYL.O) is also looking at acquisition targets that are based outside of the United States because of competitive pressures from rivals with a less burdensome tax structure, and it has made an unsuccessful bid for Swedish drugmaker Meda

"The Siemens' offer should be confirmed tomorrow during the day," the source said.

He added that the French state believed that Alstom should take the time necessary to examine all the offers on the table.

A spokesman for Siemens in Frankfurt did not confirm the information.

(Reuters) - Allergan Inc approached Shire Plc in recent months about a possible takeover but was rebuffed, according to people familiar with the matter, in the latest example of a U.S. drugmaker seeking to buy an overseas rival to lower its tax rate.

The preliminary approach for Shire, which is based in Ireland and has a market value of $33 billion, did not progress to serious discussions between the two companies, the sources said.

Since then Allergan has received an unsolicited $47 billion takeover offer from Valeant Pharmaceuticals International Inc teamed up with activist investor Bill Ackman's Pershing Square Capital Management.

Analysts have suggested one way for the Botox maker to defend against the unsolicited bid would be to acquire foreign drugmakers such as Shire, Jazz Pharmaceuticals Plc or Alkermes Plc.

One of the sources said it was unclear if Allergan would try to revive talks with Shire, or pursue another target as a means to remain independent.

Representatives for Allergan and Shire declined to comment.

In a process known as inversion, U.S. drugmakers are looking to relocate their headquarters to other countries with lower tax rates. These companies are eying potential targets that are based in Ireland in particular because of a low 12.5 percent corporate tax rate, compared to 35 percent in the United States.

Recent deals that have been driven by tax advantages include generic drugmaker Actavis Plc's $8.5 billion acquisition of Dublin-based Warner Chilcott and Perrigo Company Plc's $8.6 billion acquisition of Elan.

Generic drugmaker Mylan Inc is also looking at acquisition targets that are based outside of the United States because of competitive pressures from rivals with a less burdensome tax structure, people familiar with the matter said.

Valeant's offer for Allergan comes amid a flurry of healthcare deals this week including medical device company Zimmer Holdings Inc's $13.4 billion acquisition of rival Biomet; a $20 billion asset swap between Novartis AG and GlaxoSmithKline Pharmaceuticals PLC; and Eli Lilly and Co's acquisition of Novartis' animal health business for $5.4 billion.

Those deals have driven healthcare M&A volumes to $153.3 billion so far this year, the highest year-to-date level since Thomson Reuters has started tracking data. Pharmaceutical deals have accounted for 71 percent of overall healthcare deals.

Valeant has been on a buying spree since 2010 and last year acquired contact lens maker Bausch & Lomb Holdings. Chief Executive Michael Pearson said in January the drugmaker wants to become one of the world's top five pharmaceutical companies by market capitalization by the end of 2016, largely through acquisitions.

Pearson said on Tuesday Allergan Chief Executive David Pyott and the company's board had been unwilling to discuss a merger with Valeant. In a letter to Allergan, Valeant said it would have preferred to negotiate a deal in private.

Allergan said in a statement on Tuesday that it has received the offer, and will carefully consider the proposal and "pursue the course of action that it believes is in the best interests of the company's stockholders."

AstraZeneca results presentation at ASCO conference may be factor in Pfizer move now

Good results could boost AZN shares

AstraZeneca’s [LON: AZN] share price did not include potential upside value of its cancer drug pipeline before reports of Pfizer’s [NYSE:PFE] takeover interest, a top-ten investor said. A takeover price closer to GBP 60 per share rather than GBP 50 may be needed to secure shareholder support, he said.

The investor had not yet been contacted by Pfizer, but expected to be contacted. Pfizer confirmed Monday it had submitted a non-binding “indication of interest” in January. It made another approach on 26 April to renew discussions, following leaked reports on the initial approach.

AstraZeneca rebuffed the proposal Monday saying Pfizer’s proposed 30/70 cash-and-scrip offer “very significantly undervalued” the company. Pfizer’s 5 January proposal had an indicative value of GBP 46.61 per share. AstraZeneca shares shot up to close Monday up 14.83% at GBP 46.685.

The investor said that shareholders would want to make sure a deal is at the right price, including the upside potential from the oncology pipeline. Oncology is potentially a mega-blockbuster area, he said, pointing to their melanoma drug pipeline. The blockbuster drug pipeline was not priced in before the bid interest, he explained.

AstraZeneca shares had become “very cheap” relative to its pipeline’s potential, the investor said. Pfizer should not be allowed to share in that value without offering more than its initial GBP 46.61-per-share proposal, he said.

Ian Read, Pfizer’s CEO, touted AstraZeneca’s oncology drug pipeline as a key reason for the takeover interest, alongside a tax inversion and operational synergies, in two conference calls Monday. Combining AstraZeneca’s early- and mid-stage developments with Pfizer’s established business would create a stronger company with a deeper portfolio, Read said.

Pfizer now has a 26 May 2014 “put up or shut up” firm bid deadline under Rule 2.6(a) of the UK Takeover Code.

Pfizer may have an eye on the industry’s key American Society of Clinical Oncology (ASCO) conference beginning 28 May in Chicago, a sector banker said. It may have wanted to get a starting price into the market before this, as AstraZeneca is set to present a round of results on its oncology pipeline at the conference, he said. A good series of results could bump the company’s underlying valuation, the banker said.

AstraZeneca's will present at ASCO numerous scientific abstracts for compounds across its oncology pipeline, including the monotherapy studies for biologics MEDI4736 and AZD9291.

Read told an analyst call Monday that recent asset valuations in the industry and movements in the market prompted Pfizer to move now. An evaluation of Pfizer’s own pipeline and developments in AstraZeneca’s outlook were also factors, he said.

Asset swaps between pharma companies have become the new paradigm in the industry, former Covance CEO and professor at Warwick Business School John Lyon said. The reason for Pfizer looking at a full takeover could be that it has nothing of interest to swap with AstraZeneca, he said. Pfizer is likely to come back with a higher offer, Lyon said.

AstraZeneca’s share price may be fairly valued now, following the takeover speculation, Lyon suggested. This would mean any premium should be against today’s share price.

Meanwhile, Read would not rule out going hostile, but said he would prefer to discuss the potential deal with AstraZeneca’s board. “We believe we’ll be able to make an offer that’s attractive to AstraZeneca shareholders and their management,” he said.

Corporate governance problems at AstraZeneca should not overshadow the value of its oncology pipeline, the investor said. Those problems were highlighted last week when nearly 40% of shareholders voted against AstraZeneca management's remuneration package.

Siemens SIE.XE -2.48% is fanning flames in France.

The German giant is considering barging in on General Electric's GE -0.02% offer for Alstom's ALO.FR +10.93% energy businesses in a deal which could be worth up to €11 billion ($15.2 billion). That isn't exactly what investors had bargained for with Siemens Chief Executive Joe Kaeser. The hope was that he would outline plans to shrink the conglomerate when he presents his strategy next week.

Buying Alstom's energy businesses has some merits. It would keep GE from entrenching itself more deeply in Europe, where Siemens gets roughly half its sales. Siemens also would absorb a major competitor in power generation, doubling its share of global installed capacity to about 50%, estimates Citigroup. C -1.28% And it would take out a big rival in power transmission, leapfrogging ABB to become the largest provider of high-voltage products world-wide.

Another perk of a deal involves Siemens's proposal to swap its high-speed-trains and locomotive operations as part payment for Alstom's energy assets. That would give Siemens a welcome exit for businesses that are a drag on profits and where competition from Asian vendors shows no signs of easing.

The price tag might even look like good value. Assuming a price tag of €10 billion, Alstom's energy assets would be valued at about 8.6 times 2015 earnings before interest, taxes and amortization based on Citigroup estimates. Siemens trades at 12.6 times.

Similar to GE, though, Siemens shareholders can't ignore the hefty risks involved in pulling off this sort of deal in France.

Siemens has already promised Alstom to have no layoffs in France for three years, limiting potential cost savings. And Alstom already makes profit margins in power generation that are one-third lower than Siemens's. A deal also would mean taking on Alstom's €26 billion order backlog—and executing on its own orders has been one of Siemens' major failings, contributing to more than €20 billion in charges since 2007.

Moreover, a deal could stumble into antitrust considerations, which are greater for Siemens than for GE. For example, in turnkey solutions for gas and steam power plants, Siemens and Alstom would have a combined market share of up to 70%, according to a European Commission decision on another case cited by Exane BNP Paribas. GE's share is at most 10%.

Tempting as Alstom is, it would add more complexity at a time when Siemens investors had hoped for a simpler life.

- Now become evident in the light of recent performance that we may need to reassess the level of risk implicit in the assumptions underlying our forecasts. This may in turn require a material downward revision to expectations, and for us to review the appropriateness of our financing position. We will, therefore, be consulting with shareholders regarding the possibility of strengthening the balance sheet through an equity placing.