UPDATE 3-Allergan to cut 13 percent of jobs in fight against Valeant

Mon Jul 21, 2014 3:35pm EDT
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(Adds comments from Allergan CEO and Bill Ackman)

By Ransdell Pierson and Caroline Humer

July 21 (Reuters) - Allergan Inc, which is fighting a hostile bid from Valeant Pharmaceuticals International Inc , said on Monday it would cut 13 percent of its workforce as part of a restructuring meant to boost profits over the next six years.

The maker of anti-wrinkle drug Botox said the cost reductions, part of its efforts to convince investors that it is a better value as a stand-alone company, would help increase annual earnings more than 20 percent per year between 2014 and 2019.

Valeant and Pershing Square Capital Management made a $52 billion hostile offer for the company in April, but Allergan says the deal would hurt its growth and is not in the best interest of shareholders.

The 1,500 job cuts were more than the 5 percent to 10 percent that JPMorgan analyst Chris Schott expected, and he said Allergan therefore deserves a higher valuation.

The restructuring, which would create savings of $475 million in 2015, would also eliminate about 250 vacant positions.

It would ensure earnings in 2016 of about $10 per share, excluding special items, well above Wall Street expectations of $8.14 per share.

"Valeant has been saying they'll cut costs when they take over Allergan, and Allergan is now essentially saying, 'We can reduce our own costs,'" said Morningstar analyst Michael Waterhouse.   Continued...