Actavis (NYSE:ACT) will adopt the Allergan (NYSE:AGN) name once the $66 billion merger is complete, CEO Brent Saunders told CNBC this week.
"When you look at those two equities, both had lots of value, but Allergan really stood for innovation, it stood for customer focus, and that really describes I think the new company we are today better than Actavis," Saunders said during an interview on the television show "Squawk Box."
Actavis announced last November that it would acquire Allergan for $66 billion. Saunders told CNBC that the deal is expected to close during the 2nd quarter of 2015 at the latest.
The Irvine, Calif.-based Allergan was founded more than 60 years ago in Orange County and the medical aesthetics giant has served as a centerpoint for the robust medical technology sector that has sprung up around it and become one of the top-performing medtech clusters in the world.
While it’s not known how the Actavis/Allergan merger will impact Orange County, at a recent MassDevice.com DeviceTalks event, medtech executives were mostly optimistic that the deal would have a limited impact on the community, despite the fact that the company’s headquarters will not reside in this zip code anymore. Actavis’ U.S. operations are based in Parsippany, N.J.
Tony Sine, a former Allergan executive and current executive vice president at Alphaeon, explained that the difference in choosing Actavis over Valeant may bode well for those left at the company, in terms of how deep the cuts will run locally.
"Actavis and Valeant are very similar in a number of ways, both are tax inversion plays, both are roll-up strategies and both have a generic base that they build on with branding, but they’re very different in how they treat companies," he said. "[Actavis CEO Saunders] at Bausch & Lomb added a lot of value. He did some initial cuts but then was very focused on the brands."
Saunders was the former CEO of Valeant until this summer.
"Valeant’s model is to go in and cut a lot. So what this means is that Valeant is going to have to do a lot more transactions, especially in the medical device space. For Allergan there will definitely be some cutting, about $1.5 billion to $2 billion of expense will have to come out. Those are big numbers, but when you take Actavis’ generic business and layer on Allergan’s branded business, it gives a great portfolio going forward," Sine said.
Sine posited that the effect in Orange County may be more muted because of the Allergan products based in Irvine.
"This is the hub of their Botox franchise, which is more than ½ of their high-volume and high-margin business," he said. "They have a great volume of high-volume projects that are going to need to be done here, and my guess is there’s going to be as little disruption as possible with keeping these businesses growing."