NEW YORK — Allergan, the maker of the Botox wrinkle remover, will cut 1,500 jobs and eliminate another 250 vacant posts as it tries to fend off a hostile takeover from Valeant Pharmaceuticals International.
The job cuts, representing 13% of Allergan’s global workforce, and further restructuring will lead to savings of about $475m next year, the Irvine, California-based company said on Monday.
Allergan’s second-quarter net income was $417.2m, or $1.37 a share, the company said, compared to $352.7m or $1.17 a share a year earlier. Earnings per share excluding one-time items was $1.51 a share, beating the average estimates of 19 analysts compiled by Bloomberg by 7c.
“With continuing strong momentum, Allergan recorded the strongest increase in absolute dollar sales in any quarter in our history, and again delivered sales and earnings per-share growth above the high end of our expectations,” CEO David Pyott said.
Earnings per share will be between $8.20 and $8.40 next year and about $10 in 2016, the firm said. Both forecasts surpass the average analyst estimate of $6.90 next year and $8.18 in 2016.
Allergan shares rose less than 1% to $168.07 in New York before the close on Monday. The firm has gained 84% in the past 12 months.
Bill Ackman’s hedge fund Pershing Square has teamed up with Valeant in its bid to buy Allergan, amassing 9.7% of the drug maker’s shares. Valeant, of Quebec, Canada, has twice raised its offer, with the latest including $72 cash and 0.83 of a Valeant share. At $54bn, this would be Valeant’s largest deal, eclipsing its $8.7bn purchase of eyecare firm Bausch & Lomb last year.
That’s what pharmaceutical giant AbbVie was hoping when it announced its latest offer for smaller rival Shire on Tuesday morning. This fourth bid is worth over 30 billion pounds, or about $51.5 billion in cash and stock. That’s an 11% jump from the previous offer of $46.3 billion last month, which Shire rejected. Shire did not immediately reject this offer, but rather announced that its board would meet to “consider the proposal and a further announcement will be made in due course.” Shares of both companies fell on the news, as investors were disappointed with the offer. AbbVie shares were down about 2.5%, while Shire fell 1.6%.
The potential acquisition is just the latest in a string of 2014 health care merger tries, including Valeant’s ongoing pursuit of Allergan, Pfizer’s failed bid to buy AstraZeneca, and Medtronic’s recent deal for Covidien. Like Pfizer’s controversial plan to buy AstraZeneca, the Abbvie-Shire merger is based on the inversion tax loop hole, in which American countries can avoid US corporate taxes and access overseas profits by reincorporating in the country of their acquisition. Shire, based in Ireland, poses a tempting target for the $89 billion market cap Abbvie, based in Chicago. “This transaction is a combination of two leading companies with leadership positions in specialty pharmaceuticals that would create a global market leader with unique characteristics and a compelling investment thesis,” AbbVie Chairman and CEO Richard Gonzalez said in a statement. “AbbVie will bring greater financial strength and R&D experience to this combination that will enable both companies to reach their full potential for their shareholders and patients in need across the globe.”