Allergan, which is trying to fend off a $53 billion hostile takeover bidfrom Valeant Pharmaceuticals International, has also rejected an offer from Actavis and is itself in talks to buy Salix Pharmaceuticals, according to the Wall Street Journal.

The newspaper cites unnamed sources as saying that Actavis made an all-cash offer last month, thought to be in the region of $50 billion, but Allergan turned the bid as it is reportedly looking to seal a deal for Salix which is worth around $10 billion. One of the sources claimed that Actavis offered to maintain Allergan’s R&D spend and still remains interested but only in a friendly merger.

However, an Allergan acquisition of Salix, likely valued at more than $10 billion, could be announced late this week or next, some of the people said. However, complicating the issue is that Salix agreed to merge with a unit of Italy's Cosmo Pharmaceuticals in July, a deal which would allow the former to locate to Ireland for tax purposes.

There have been reports that Salix shareholders are not impressed by the Cosmo tie-up and are pushing for a bigger deal.

Any of these transactions would annoy Valeant which, along with hedge fund Pershing Square, has been fighting an acrimonious battle since April to buy Allergan.