Allergan shareholder Paulson & Co is said to be urging the Botox maker to merge with specialty pharmaceutical company Shire as an alternative to a deal with hostile bidder Valeant Pharmaceuticals, according to two people familiar with the matter.

The hedge fund told Allergan CEO David Pyott that it would support a deal with Shire, sources said. The deal would not be structured as a so-called tax inversion.

It was not immediately clear whether Allergan would pursue such a deal. Allergan and Paulson declined to comment.

The move by Paulson, Allergan’s third-largest shareholder, comes as AbbVie’s $54 billion deal to buy Shire is close to unraveling after the US government changed the rules governing tax inversions.

Shareholders including Paulson are looking at alternative strategies for Allergan as it tries to fend off a deal from Valeant. Some large Allergan shareholders have said they would prefer a deal with drugmaker Actavis Plc to a tie-up with Shire.

Paulson was also pushing behind the scenes for a deal between Allergan and Valeant earlier this summer, sources previously told Reuters. It remains unclear if the fund is still in favor of that.

Valeant might raise its bid for Allergan and would not abandon its pursuit ahead of a December 18 special meeting, Michael Pearson, CEO of the Laval, Quebec-based company, said on Monday.

Reuters