U.S.-based Valeant Pharmaceuticals International, which agreed to be bought by Canada's Biovail Corp in June, said they would cut about 25 percent of the combined company's U.S. and Canadian workforce as part of the integration plans.
Over $300 million of cost synergies have been identified and we expect to realize well north of $200 million in 2011, Valeant Chief Executive J. Michael Pearson said in a letter to the employees.
The rest will be captured in 2012, Pearson, who will be heading the new company, added. The companies have a combined workforce of about 4,400.
Combined cash tax rate by the end of 2012 is expected to be about 15 percent. The companies had agreed to merge in a complex deal that is structured to take advantage of tax breaks and other savings. [ID:nSGE65K07S]
Pearson said that while the new company would continue to invest in research and development, it would focus on acquiring smaller in-line products that can be grown dramatically through the company's infrastructure and commercial processes.
Valeant shares closed at $59.98 Friday on the New York Stock Exchange, while Biovail shares closed at C$24.94 on the Toronto Stock Exchange.
Biovail shares have risen 68 percent, while the Valeant stock has increased 31 percent since the news of the deal. (Reporting by Esha Dey in Bangalore; Editing by Maju Samuel)