Yesterday's press release about the Biovail-Valeant Pharmaceuticals merger didn't mention one key fact: Combining the two companies will lead to layoffs. Up to 20 percent of the combined workforce--or up to 870 jobs.
That's the word from incoming CEO Michael Pearson, who made the announcement during a conference call about the deal. In touting the $175 million in cost savings from the reverse merger--and the deal's ability to boost earnings per share within the first year--Pearson acknowledged that he'll have to reduce headcount to make those two things happen.
It is hardly novel that a merger leads to layoffs; indeed, one of the selling points of any deal is the costs that can be cut from overlapping functions. And those cuts usually include jobs. So when Pfizer and Wyeth announced their megamerger, they, too announced job cuts of up to 20 percent of their combined workforce, or 19,500. So did Merck and Schering-Plough, which aimed to eliminate some 16,000 jobs. When Roche bought the rest of Genentech it didn't already own, it started cutting jobs as well.