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ORANGE COUNTY BRIEFLY

Takeover Rumors Fuel Allergan Options Trading

August 28, 1996

IRVINE — Allergan Inc. options trading picked up Tuesday amid speculation among some investors that the company could be acquired in the next few months, analysts said.

There has been continuing speculation that Pharmacia & Upjohn Inc. could renew acquisition talks with Allergan that were broken off in May.

There were 685 call options traded, giving investors the right to buy Allergan shares at $40 each before Sept. 21. The highest number of the September $40 contracts traded previously was 415. There were also 850 call options traded giving investors the right to buy Allergan shares at $45 each before Oct. 19, compared with four traded Monday.

Heavy trading in the September and October options might be a sign that some investors expect the shares to rise. Allergan shares were unchanged Tuesday at $38.875.

Allergan spokesman Jeff D'Eliscu said it is against company policy to comment on speculation. Pharmacia & Upjohn spokesman Phil Carra also declined to comment on takeover speculation, citing company policy.

Talks between the two companies broke down after Volvo AB, then Pharmacia & Upjohn's largest shareholder, opposed the transaction because the acquisition could prevent it from selling part of its Pharmacia & Upjohn stake, analysts said. Volvo has since cut its stake in the drug company to 4.7% from 13.7%.

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