Allergan CFO's departure may signal strength, not weakness

Jeff Edwards

The sudden departure of a C-suite exec always raises eyebrows. When the company is a buyout target in the midst of a heated takeover battle, the questions really fly. But in the case of Allergan ($AGN) CFO Jeff Edwards, whose departure the company announced Monday, analysts say there's nothing to worry about.

After 21 years at the company, Edwards will step down due to family commitments--effective immediately, Allergan said in a release. SVP Jim Hindman will take his place.

That's all there is to it, an Allergan spokeswoman told The Wall Street Journal, adding that the company was "pleased" it could accommodate Edwards' request to depart. And despite the ongoing clash between the California drugmaker and Valeant ($VRX), which is looking to buy it via a $53 billion hostile bid, analysts seem to agree.

Sanford Bernstein's Aaron Gal told Bloomberg he'd spoken with Edwards, who explained that the departure was a long time coming--only to be delayed by the Valeant saga. Morningstar analyst Michael Waterhouse echoed that sentiment, calling the timing "a bit odd" but not reading too much into the decision.

In fact, not only are some analysts not concerned, but at least one takes the announcement as a point of strength for Allergan. It could be a hint at an independent future, BMO Capital Markets' David Maris wrote in a note seen by the news service.

"[T]o us, it may be a sign that a strategic transaction marking a new chapter in Allergan's growth may be nearing, and not an imminent change of control," Maris wrote, pointing out that an Allergan buyout would be "a significant financial gain" for a top executive. "In other words, Edwards would be leaving a lot of money on the table if he believed a change of control of Allergan were in the future," Maris wrote.

Whether or not Edwards sees a takeover in Allergan's future, Valeant CEO J. Michael Pearson and partner Bill Ackman are still holding out for exactly that. Friday, the Canadian pharma extended the expiration of its tender offer to Dec. 31.

- read Allergan's release
- get more from Bloomberg
- see The Wall Street Journal's take (sub. req.)

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