The latest hot mergers and acquisitions out of the health care sector is Botox maker Allergan (NYSE: AGN) reportedly approaching Salix Pharmaceuticals (NasdaqGS: SLXP).
California-based Allergan is trying stave off a $53 billion hostile bid from Valeant Pharmaceuticals (NYSE: VRX). In April, it was reported that hedge fund manager Bill Ackman took a stake of 9.7% in Allergan and is teaming up with Valeant to make a move on the company. [Ackman Might Like These Pharma ETFs]
Sources could not confirm where Allergan’s talks with Salix stand, but those sources did say the former could strike a deal with Salix or another company as soon as September, the Wall Street Journal reported Tuesday.
Assuming Allergan does make an offer for Salix and the takeover premium is to investors’ liking, several exchange traded funds could benefit in significant fashion.
Start with the $885.9 million SPDR Pharmaceuticals ETF (NYSEArca: XPH). XPH is no stranger to benefiting from health care mergers and acquisitions news. The ETF surged earlier this year whenActavis (NYSE: ACT), currently XPH’s tenth-largest holding, acquired Forest Laboratories (NYSE: FRX) for $25 billion. [Forest Deal Fantastic for Pharma ETFs]
Salix is XPH’s fourth-largest holding, occupying a weight of 4.1% as of Aug. 18. In addition to holding Salix, XPH is home to another company that is often mentioned as a takeover target: Jazz Pharmaceuticals (NasdaqGS: JAZZ). Jazz is XPH’s sixth-largest holding at a weight of almost 3.6%.