Updated July 21, 2014, at 12:40 p.m. EST with additional information on Allergan’s earnings.
Medical device maker Allergan (NYSE:AGN) announced today that it plans to cut 13% of its global workforce and delete some vacancies as the battle heats between the company and its unwelcome suitors.
The embattled Allergan said that it would lay off around 1,500 employees and eliminate some 250 vacant positions in a larger restructuring effort that the company estimates could save around $475 million in the 2015 calendar year.
Allergan announced in a separate letter to employees that the company would close its sites in Santa Barbara, Medford and Carlsbad. The cuts will be complete by January 2015, the company said.
"The restructuring will be conducted consistent with Allergan’s model of driving high quality earnings growth through a customer-centric focus on net sales growth and ensuring that Allergan maintains an innovation-focused research and development pipeline to deliver sustained long-term growth," according to the company’s earnings report today. "Hence, approximately 94% of all customer-facing personnel are unaffected by the restructuring. All pharmaceutical research and development programs in the clinic will continue, and any reductions in discovery programs will not impact approvals within the strategic plan period."
The layoffs come amid a turbulent time for the company, which is still fending off the unwelcome advances of would-be acquirer Valeant Pharmaceuticals and its activist-investor supporters.
Valeant dropped a new bomb on Allergan this week, taking to the SEC as well as regulatory authorities in Quebec to accuse Allergan of making "false and misleading statements" to deter shareholders from Valeant’s share purchase offer. The companies have been battling it out in sparring press statements and shareholder memos ever since Valeant approached Allergan in April.
Read more of MassDevice.com’s coverage of the Allergan hostile takeover saga
"We can no longer tolerate unjustified attacks on Valeant’s business and strongly believe we are obligated to take action to protect Valeant shareholders from Allergan’s apparent attempts to mislead investors and manipulate the market for Valeant stock," Valeant CEO Michael Pearson said in prepared remarks. "We do not believe that it is productive for either company to conduct due diligence in a public forum and although we have consistently offered Allergan the opportunity to conduct due diligence on our business, its management and board have refused, and have instead chosen to make misrepresentations and false statements about our business."
The latest alleged transgression took place just last week when Allergan on Friday suggested in its regulatory filings that Bausch & Lomb, which Valeant acquired in May 2013 for $9 billion, was suffering under its new management.
"Valeant has owned Bausch + Lomb for 11 months and the business has performed extremely well, delivering total organic growth of 11% since the acquisition, with over 90% of that growth attributable to volume," Pearson added. "With our continued success with Bausch + Lomb, we believe that the Bausch + Lomb transaction is a perfect blueprint for our proposed merger with Allergan."
Allergan responded to the allegations with a staunch refusal to back down.
"Allergan stands by its comments. We call on Valeant to report complete and transparent details on its business on an ongoing basis," a company spokesperson told MassDevice.com in an emailed statement today. "At the end of the day, investors will make their own decisions."
Allergan’s restructuring efforts and its newly unveiled Q2 earnings report have put some new pressure on Valeant as the device maker looks increasingly more attractive on its own, MarketWatch reported.
Irvine, Calif.-based Allergan posted a 16.7% increase in revenues and a 15.9% spike in earnings for the 3 months ended June 30. Adjusted per-share earnings came in at $1.51, beating analysts’ estimates as well as Allergan’s own projections.
In total Allergan reported $417.2 million in profit, or $1.37 per diluted share, on sales of $1.86 billion for its 2nd quarter 2014. That compared with profits of $359.9 million, or $1.19 per share, on sales of $1.6 billion during the same period last year.
"Today’s announcement by Allergan makes it more difficult for Valeant to demonstrate how a merger can add incremental value," Sterne Agee analyst Shibani Malhotra wrote in a note to clients. "[Allergan] shareholders may now require Valeant to pay a greater premium for Allergan."
Valeant has already twice sweetened the pot for Allergan to no avail.
AGN shares enjoyed a 2% boost today, trading at $170.82 as of about 12:40 p.m. EST. The stock has gained 2.8% over the last month and is up 53% since the start of the year.
