Allergan (AGN) will lay off 1,500 employees, or about 13% of its workforce, as it aggressively tries to cut costs to prevent a takeover bid by Valeant Pharmaceuticals (VRX), the company announced Monday.
Allergan, the maker of Botox, has been a tear to uncover what it calls “stockholder value enhancements,” or what many refer to as classic cost cutting.
The job cuts, which include an additional 250 vacant positions, and other streamlining efforts will save the drugmaker about $475 million over the 2015 calendar year.
Allergan could use the extra firepower to fend off Valeant after its top shareholder, Capital Research and Management, sold off nearly all of its holdings in the company. The large-scale investment manager, previously held about 7.2% of shares, according to Bloomberg data.
Capital Research was said to close out its position after meeting with Allergan CEO David Pyott on concerns that shares of the drugmaker won’t go much higher than Valeant’s $173.24 a share offer price based on Valeant’s closing price Friday, reported The Wall Street Journal.
Valeant, in partnership with activist investor Bill Ackman, issued an unsolicited takeover offer for Allergan worth about $53 billion, and in late June appealed directly to shareholders to try to win over the company.
Allergan’s board of directors recommended that shareholders reject the proposal, saying it grossly undervalued the company. The board also responded with its latest cost-cutting measures.
The Irvine, Calif.-based drugmaker posted second-quarter earnings above analyst expectations. Earnings-per-share were $1.45 and revenue was $1.86 billion, compared to expected earnings of $1.44 a share and sales of $1.77 billion.
Allergan expects the current-year earnings, as well as 2015 and 2016 results, to beat analyst expectations with an anticipated annual earnings growth rate of more than 20%.