Allergan restructuring to cut 1,500 employees
By Tom Murphy, AP
July 23, 2014, 12:15 am TWN
Botox maker Allergan will cut about 13 percent of its workforce as part of a push to become more efficient while it fights a hostile takeover bid from Valeant Pharmaceuticals.
The Irvine, California, company said Monday it plans to trim about 1,500 employees and around 250 vacant positions as it restructures to focus on its "highest value opportunities."
Allergan said its restructuring will yield annual pretax savings of about US$475 million in 2015. It announced the cuts the same day it said second-quarter results trumped analyst expectations, as earnings grew 16 percent to US$417.2 million.
"Today's results demonstrate that we're clearly on the right path," Chairman and CEO David Pyott told analysts during a conference call. "The actions announced today will only accelerate our trajectory."
Allergan Inc. has rejected several takeover attempts from Valeant Pharmaceuticals International Inc. and activist investor Bill Ackman's Pershing Square Capital Management. The latest amounts to about US$53 billion in cash and stock.
Valeant has promised cost-cutting and savings of its own if the two companies combine. Ackman, whose company owns a 9.7 percent stake in Allergan, told CNBC that shareholders had been asking for Allergan cost-cutting for some time. He said the reductions that the company announced Monday amounted to "cutting out fat you should have cut out a long time ago."
"Allergan can only achieve so much as a stand-alone company," he said.
Ackman has lined up nominees for Allergan's board, and Pershing Square wants to hold a special meeting where Allergan shareholders can have a say in the buyout bid and on the company's direction.
Allergan, which also makes the dry-eye treatment Restasis, has adopted a "poison pill" measure to block a takeover. Pyott said Monday that Valeant's offer was "so far away from the intrinsic value of this company" that there was no reason for the drugmakers to have substantive talks.