Allergan Inc. (AGN), the drugmaker fending off a takeover by Valeant Pharmaceuticals International Inc. (VRX), will cut 1,500 jobs and may use the savings for an acquisition, its chief executive officer said.
The job cuts represent about 13 percent of the global workforce for the company best known for its Botox wrinkle remover. Along with other restructuring, the cuts will spur savings of about $475 million in 2015, the Irvine, California-based drugmaker said today in a statement.
While Allergan was seen by some analysts as a potential acquirer of Shire Plc, bought by AbbVie Inc. (ABBV) last week, the company still “has a lot of options,” David Pyott, Allergan’s CEO, said in a telephone interview. “To focus on Shire alone is in the category of nonsense.”
AbbVie’s deal with Shire will allow it to redomicile abroad to gain a tax advantage. Any such deal for Allergan would require a shareholder vote and “would have to be a very compelling strategic transaction to make sure we got the right number of votes,” Pyott said.
In an interview on Bloomberg television, Valeant Chief Executive Officer Michael Pearson said today that a “a non-value creating deal” may push Valeant to “modify our offer lower, and it might force us to walk.”
Allergan earlier announced that second-quarter net income rose 18.3 percent from a year earlier to $417.2 million, or $1.37 a share. Earnings excluding one-time items were $1.51 a share, beating by 7 cents the average of 19 analysts’ estimates compiled by Bloomberg.
The company projected earnings per share of $8.20 to $8.40 in 2015 and about $10 in 2016. Both forecasts surpass the average analyst estimate of $6.90 in 2015 and $8.18 in 2016.
Allergan shares rose 2.2 percent to close at $171.14 in New York. The company has gained 86 percent in the past 12 months.
Bill Ackman’s hedge fund Pershing Square Capital Management LP has teamed with Valeant in its bid to buy Allergan, amassing 9.7 percent of the drugmaker’s shares.
Valeant, of Laval, Quebec, has twice raised its offer, with the latest including $72 cash and 0.83 of a Valeant share. At $54 billion, this would be Valeant’s largest deal, eclipsing its $8.7 billion purchase of eye care company Bausch & Lomb Inc. last year.
Allergan has repeatedly rejected Valeant’s terms as inadequate.
Valeant will pursue the Allergan bid until the company’s shareholders vote on it, Ackman said today in a telephone interview with Bloomberg Television. Allergan’s restructuring announcements today are simply “Valeant-light” cost cuts coming too late, he said.
Pyott today “talked about running out and doing an all-cash deal that wouldn’t require shareholder support, as a way to defend the company,” Ackman said. “I’m frightened of that, as should any shareholder.”
Valeant also said today it has contacted Canadian and U.S. regulators concerning Allergan’s past statements about Valeant’s Bausch & Lomb unit.
Valeant told the Autorite des marches financiers, Quebec’s regulators, and the U.S. Securities and Exchange Commission that Allergan has falsely asserted that Bausch & Lomb’s pharmaceutical sales were stagnating or declining, an “apparent attempt to mislead investors and manipulate the market,” the company said in a statement.
“Allergan stands by its comments,” Scott Bisang, an Allergan spokesman at Joele Frank, Wilkinson Brimmer & Katcher, the company’s outside representative, said today in an e-mail. “We call on Valeant to report complete and transparent details on its business.”
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