Allergan is cutting jobs.
Along with its second quarter earnings results this morning, Allergan announced “stockholder value enhancements,” which include cutting 1,500 jobs, or approximately 13% of its current global headcount, and eliminate approximately 250 vacant positions.
Allergan is currently fending off a takeover bid from Valeant and activist investor Bill Ackman, which this morning announced that it contracted the SEC and regulatory authorities in Canada regarding, “Allergan’s apparent attempt to mislead investors and manipulate the market for Valeant common shares by continuing to make false and misleading statements regarding Valeant’s business despite Valeant’s public statements correcting such information.”
Specifically, Valeant takes issue with Allergan’s assertions in an SEC filing last week that said the performance of Valeant’s Bausch & Lomb unit is overstated.
In addition to cutting jobs, Allergan announced that it will execute a restructuring plan that the company expects will save it approximately $US475 million in 2015. The company says these savings, “will come from efficiencies and reductions in spend across the commercial organisation, general and administrative functions, manufacturing and the research and development organisation.”
Allergan also said that, “Additional strategic options are available including business development / acquisitions and capital return.”
In light of the company’s attempt to fend off Valeant’s takeover bid, the restructuring measures shouldn’t come as a complete surprise. Reducing headcount and cutting expenses can be seen as proactive measures from Allergan’s management as it seeks to assure current shareholders that the company will be better off on its own.
Allergan said that its strategic plan, which runs through 2019, should deliver compound annual earnings growth of more than 20%, with the company estimating full-year earnings per share of $US10 in 2016. This year, the company expects to earn between $US5.74 and $US5.80 per share.
As for Allergan’s second quarter results, the company reported earnings per share, excluding certain items, of $US1.51, better than the $US1.44 that was expected by analysts. The Botox-maker’s net product sales also totaled $US1.83 billion, better than the $US1.77 billion that expected by analysts.