Allergan To Trim 13 Percent Of Workforce, Ward Off $52 Billion Takeover

By Jof Enriquez,
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Medical device and Botox maker Allergan Inc. plans to cut 1,500 jobs – roughly 13 percent of its global workforce – as it tries to improve its financial standing amid a hostile takeover attempt by Valeant Pharmaceuticals. 

In addition to the layoffs, Allergan said it would also halt early-stage research and development projects as part of a restructuring strategy that would save the company approximately $475 million next year, according to the Wall Street Journal. Allergan chief executive David E.I. Pyott told the WSJ that the company is still evaluating a “meaningful strategic acquisition” after saving money from its restructuring efforts.

The majority of the job cuts will impact workers in Southern California, according to a Los Angeles Times report. In that area, a total of 650 R&D employees will be let go from its Irvine headquarters. The company also plans to close its facilities in Santa Barbara and Carlsbad, eliminating an additional 400 jobs. Pyott told the Times that the cuts, which will be implemented by Thanksgiving, are “extremely unpleasant,” but they pale in comparison to the 5,000 jobs Valeant would slash if the merger pushes through.

Canadian drug maker Valeant had made a $52 billion takeover offer for Allergan in April, but Allergan said the offer was inadequate. Allergan’s recent job cuts could convince shareholders that the company is capable of standing alone.

"Valeant has been saying they’ll cut costs when they take over Allergan, and Allergan is now essentially saying, ‘We can reduce our own costs,’" Morningstar analyst Michael Waterhouse told Reuters.

Investor Bill Ackman of Pershing Square Capital Management, the company helping Valeant with its bid, described Allergan’s restructuring move as "simply ‘Valeant-light’ cost cuts coming too late," and said that Valeant will pursue its bid until shareholders vote on it, according a Bloomberg article.