Giant U.S. pharmaceutical group Abbott Laboratories (ABT) will cut 3,000 jobs, or about 3% of its workforce, following its purchase of Solvay's pharmaceuticals business, media reports indicated. Abbott shares fell nearly 0.3% in late-morning trading.
Abbott, which acquired Solvay's drugs unit last year, announced in a regulatory filing a restructuring plan related to the acquisition. "This plan streamlines operations, improves efficiencies and reduces costs in certain Solvay sites and functions as well as in certain Abbott and Solvay commercial organizations in various countries. Action plans have been identified and most are expected to be implemented within the next two years," Abbott said.
The majority of the savings are targeted to be realized by 2012, Abbott said. The plan will result in total pre-tax charges of approximately $810 to $970 million over the next two years. In addition, Abbott expects to incur one-time integration costs of approximately $135 million in the second half of 2010 and $175 million in 2011. These costs will not impact Abbott's ongoing earnings-per-share guidance in 2010, the company said.
The cuts will take place over the next two years and the vast majority will come from one-time Solvay positions, Reuters reported. Most of the positions to be eliminated will be in sales, manufacturing, research, and corporate staff, Bloomberg added, with the majority of the cuts in Europe. But Abbott will also close the former U.S. headquarters of Solvay's pharmaceuticals unit in Marietta, Ga.
Illinois-based Abbott closed its $6.2 billion deal for the Brussels-based Solvay unit in February. Back then, it said the deal is providing Abbott with a large and complementary portfolio of pharmaceutical products, such as cholesterol treatments, and expanding Abbott's presence in key global emerging markets. Based on the timing of the close, Abbott expects the acquisition to add approximately $2.9 billion to Abbott's 2010 total reported sales, the majority outside the U.S.