California's Allergan ($AGN) desperately wanted to avoid a hostile takeover by Valeant ($VRX), fearful it would ravage its R&D operations in favor of its marketing oriented approach to the business. So it turned to Actavis ($ACT) as a white knight. But Actavis is also known to cut jobs with impunity to make deals pay and Allergan need look only a few miles down the road for proof of that as Actavis prepares to lay off 200 at it operations in Corona, CA.
The cuts, outlined in a state filing are set for Jan. 2, according to the Orange County Business Journal. Nothing more is outlined in terms of what kinds of jobs will be lost. Actavis spokesman David Belian pointed out in a call that the cuts in Corona are part of a gradual drawdown that has been going on for sometime at that site and that no decisions have been made about reductions that might result from the buyout of Allergan
Actavis and Allergan just last month reached a quickly negotiated $66 billion deal, derailing months of effort by Valeant to buy the Botox maker for about $54 billion. One of Allergan's arguments against pairing up with Valeant is a belief that it would take an ax to its R&D operations, cutting people to cut dollars. But in announcing its Allergan deal, Actavis noted that it can realize "at least $1.8 billion in annual synergies commencing in 2016, in addition to the $475 million of annual savings previously announced by Allergan." And synergies inevitably mean job cuts.
In fact, Actavis has always been up front that duplication is part of any merger and so whacking jobs is an unpleasant necessity of growth. It has been just over a year ago that it announced it would lay off about 30% of its sales force in the U.S. after completing its its $8.5 billion merger with Warner Chilcott. That was about 350 jobs.
In July, after closing its deal to buy Forest Laboratories, it handed out pink slips to about 200 employees who had worked for Forest in the St. Louis, MO area. That came even as top execs were themselves handed up to $186 million in "merger success awards" for closing the $25 billion deal. Actavis has yet to say how many jobs might be lost as a result of its melding with Allergan but the Botox maker will be adding 11,500 employees to the approximately 25,000 Actavis already has.
As for the cuts in Corona, the Business Journal points out that it was the original home of the company that started out as Watson Pharmaceuticals, the small generics maker that has bought and built its way into an operation now slated to have $23 billion in annual revenue.
- read the Business Journal story
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