As the dust settles around Actavis' announced buyout of Warner Chilcott, it's time to dig into some of the nitty-gritty details about "New Actavis." For instance, which of Warner's top people will stick around--and if they don't, how much severance might they collect on the way out? And just how big is the tax cut Actavis expects from making the deal?
|Actavis CEO Paul Bisaro|
On the call with analysts yesterday, Actavis CEO Paul Bisaro said up front that the combined company "will be led by Actavis management." That sounds a lot like a goodbye to Warner chief Roger Boissonneault, at least. Later in the presentation, when an analyst asked how involved Warner's leaders might be in the new company, Bisaro gave the logical answer: At least some of those decisions have yet to be made.
"We will, of course, look to share each other's best practices," he said, adding, "[W]e think that the Warner Chilcott team brings enormous talent. And we will be looking to add that talent to our own." And Boissonneault spoke as if he's planning to stick around, at least for awhile: "We are building Actavis, and certainly we are an active part of building it," he said.
That's to be expected; typically, the acquired company's top officials don't announce their own fate till after the closing. And even if Boissonneault stays put during the integration, he's up for a handsome severance payment down the road. According to the company's latest proxy statement, Boissonneault is entitled to an estimated $9.2 million in cash, shares, options, and benefits if he's terminated "in connection with" or during the 24 months after a change in control. For comparison's sake, his 2012 total compensation amounted to about $6.62 million.
Whether Boissonneault remains or not, it's unlikely that any of Actavis' top management will actually relocate to Ireland. The company's new headquarters may be there, its top execs will be visiting quite a bit, but permanent moves? "Everybody loves New Jersey too much, so nobody is willing to go," Bisaro said during the call. "[W]e don't think anyone will be moving."
What will be moving is the company's tax rate. According to Bloomberg, the new Actavis will lower that rate to 17% from 37% within a year. The company will be paying lower U.S. taxes, and lower taxes overall, the news service says. Some of that tax benefit comes from the merger that formed the most recent version of Actavis; Watson Pharmaceuticals bought the Swiss-based generics maker last year and adopted its name, as well as some of its home jurisdiction's tax advantages. That buyout sliced 9 percentage points off Watson's tax rate, and the Warner deal adds another 10 percentage point cut.
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