Valeant International Inc.’s plans for absorbing Bausch & Lomb Inc. include centering U.S. eye-health operations outside of Rochester and New York and cutting an undisclosed number of jobs.
“We will operate our U.S. headquarters and new U.S. eye health business unit in New Jersey,” Valeant CEO Michael Pearson revealed in a recent memo sent out to employees of both firms and filed with the Securities and Exchange Commission Monday.
Rochester Mayor Thomas Richards said he contacted the Canada-based firm’s management and got assurances some functions, including research and development, would stay here.
“I…urged them to continue their presence and investment in Rochester,” Richards said. “While it is encouraging that the company is making a commitment to keeping the R&D and manufacturing facilities in Rochester, (the headquarters move) leaves a great many jobs…in question.”
Rochester Business Alliance Inc. president and CEO Sandra Parker echoed Richards’ concerns.
“There is no question that the moving of Bausch & Lomb corporate headquarters out of Rochester and the corresponding loss of jobs will have a significant impact on the region,” Parker said.
“However, it is encouraging that contact lens manufacturing is slated to remain here,” she added. “As we’ve seen in the past with changes at other local corporate giants, Rochester has a resilient economy and we’ll be able to get through this.”
Valeant announced plans in May to acquire Bausch & Lomb from its private-equity owner, Warburg Pincus LLP.
Quebec-based Valeant planned to keep the Bausch & Lomb name after the roughly $8.7 billion deal closes, but the merger would not be a joining of equals and would involve cuts totaling $800 million trimmed from both firms, Pearson told analysts in May. Bausch & Lomb’s sales, general and administrative functions would be particularly targeted, he said.
“Day one of our new combined company rapidly approaches,” Pearson wrote in the recent memo. “We intend and expect to reduce headcount by approximately 10-15 percent across the newly combined company.”
The memo names 10 Bausch & Lomb executives as slated “to transition out of the company,” but also lists a dozen eye-care company executives who plan to stay on after the merger.
Bausch & Lomb CEO Brent Saunders said in May he would stay as a temporary consultant to help smooth the eye-care company’s transition from a virtual stand-alone company to a Valeant unit.
In May, Pearson named Daniel Wechsler, Bausch & Lomb’s Global Pharmaceuticals president, as designated to run the eye-care company as a Valeant unit.
In the recent memo, Pearson outlined changes planned for Bausch & Lomb in line with those he described to analysts in May.
“We are planning to eliminate the global structure and to reduce significantly the regional structure currently in place at Bausch & Lomb,” the Valeant CEO wrote.
A onetime McKinsey & Co. consultant, Pearson’s formula for running Valeant, a company he essentially put together in a series of acquisitions, has included cutting tax obligations to a 5 percent effective rate. Valeant also has kept investments in new R&D low, preferring to acquire or license already products and technology developed by others. He intended to hew to both of those strategies with Bausch & Lomb, Pearson said in May.
“From a cost standpoint, we will continue to apply a low margin operating mindset to high margin businesses,” the Valeant CEO wrote in the recent memo. “We take pride in our frugality, our ability to make quick decisions based on internal resources and our willingness to all wear different hats at different times.”
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