The company logo of Valeant Pharmaceuticals International Inc is seen at its headquarters in Laval, Quebec May 19, 2015.Christinne Muschi/Reuters
Shares of Zoetis Inc. surged to their highest price ever after a report that the animal health company had been approached about a takeover by Valeant Pharmaceuticals International Inc.
Zoetis rose 11 per cent to $55.38 (U.S.) at the close in New York, the highest price since the stock began trading in 2013. Dow Jones reported Thursday that Valeant had made a preliminary approach about a deal, citing people familiar with the matter.
The company makes drugs for pets and livestock. Once part of New York-based Pfizer Inc., it was sold to shareholders in an initial public offering as part of Pfizer's plan to focus on its pipeline of human drugs.
A deal could be helped along by activist investor Bill Ackman, who holds 8.4 per cent of Zoetis shares, according to an April 10 regulatory filing.
Using that stake, he gained control of two Zoetis board seats, and called for Zoetis to trim its expenses. In May, the animal-health company followed suit and said it would cut $300-million in annual costs, closing factories and firing about a quarter of its workforce.
Valeant and Ackman have worked together before, on Valeant's failed takeover attempt of Allergan Inc. last year. Since then, Valeant has been looking for more deals. The company bought Salix Pharmaceuticals Ltd. for $12.5-billion in April, and is in advanced talks to acquire Egyptian drug maker Amoun Pharmaceutical Co., people familiar with the matter said earlier this month.
Including Thursday's gain, Zoetis shares have gained 29 percent this year, giving the company a market value of about $28-billion.
Valeant declined to comment, and a representative for Zoetis didn't respond to a request for comment.