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Allergan to Cut 1,500 Employees in Restructuring

By Associated Press - Jul 21, 2014 at 10:26AM

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Allergan said its restructuring will yield annual pre-tax savings of about $475 million in 2015, while costs tied to it will total between $375 million and $425 million.

Botox maker Allergan will cut about 13% of its workforce, or roughly 1,500 employees, as part of a push to become more efficient and productive.

The Irvine, Calif., company also said Monday it plans to eliminate about 250 vacant positions in a restructuring that will streamline its business and allow the drugmaker to focus on its "highest value opportunities."

Allergan, which is fighting a takeover bid from Valeant Pharmaceuticals, announced the cuts the same day it also said second-quarter earnings grew 16% to $417.2 million, or $1.37 per share, and revenue jumped 17% to $1.86 billion.

Both earnings and revenue trumped analyst expectations, according to FactSet.

The drugmaker also raised its forecast for adjusted 2014 earnings to between $5.74 and $5.80 per share from a range of $5.64 to $5.73 that it predicted in May. Analysts expect, on average, $5.71 per share.

Allergan said its restructuring will yield annual pre-tax savings of about $475 million in 2015, while costs tied to it will total between $375 million and $425 million.

The Canadian drugmaker Valeant Pharmaceuticals International and investment firm Pershing Square Capital Management have made several bids to buy Allergan, the latest amounting to about $53 billion in cash and stock.

Allergan has said the offers "substantially undervalue" the company and create big risks for its shareholders. It also has adopted a "poison pill" measure to block a takeover.

Pershing Square wants to hold a special meeting where Allergan shareholders can have a say in the buyout bid and on the company's direction.

In the takeover battle's latest twist, Valeant said Monday it has complained to regulators that Allergan has been making false statements about its business even though Valeant has publicly corrected it.

Valeant said the latest example of these statements involves the performance of contact lens maker Bausch + Lomb, which Valeant acquired last year. Valeant said Allergan has falsely asserted that the business's pharmaceutical sales were stagnant or declining when it actually grew in the second quarter.

"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 Chairman and CEO J. Michael Pearson said in a statement from the company.

An Allergan spokesman responded by email that the company stood by its comments.

"We call on Valeant to report complete and transparent details on its business on an ongoing basis," the spokesman said. "At the end of the day, investors will make their own decisions."

Valeant has complained to the Securities and Exchange Commission and regulators in the Canadian province of Quebec, where Valeant is based.

Shares of Allergan climbed $0.35 to $167.75 Monday at the start of trading. The stock had already climbed 51% so far this year as of Friday's close, beating the 7% gain from the Standard & Poor's 500 index over the same period.

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