Posted at: 07/29/2013 11:42 AM
Updated at: 07/29/2013 7:15 PM
In an open letter to Bausch and Lomb employees, the CEO of the company buying B&L said he expects to "reduce headcount by approximately 10-15% across the newly combined company."
The letter is dated today, July 29th, and was filed with the Securities and Exchange Commission.
The letter was written by J. Michael Pearson, CEO of Valeant Pharmaceuticals. In the letter, Pearson writes the "remaining approvals" needed to close the purchase of B&L "will be received sometime in early August." Valeant is announcing its 2nd quarter earnings in a conference call on August 7th.
According to its website, Bausch and Lomb employs 11,000 worldwide. Valeant employs 7,000 people around the world. Combined, the work force would total 18,000. A 15% cut would equal 2,700 employees.
B&L employs 1,700 people in Rochester.
Larger, faster "cost synergies"
Pearson also writes that the total size of its cost savings after buying B&L, what he calls "cost synergies," will be larger and happen faster than Pearson originally told Wall Street investors in May. Pearson writes, "the initial synergy targets, both in terms of dollars and timing, are likely to be exceeded. Over $800 million of cost synergies are expected to be realized with a run rate of well north of $500 million to be realized in 2013."
In a May conference call with investors shortly after announcing the purchase of B&L, Pearson said the company will "realize" $800 million by the end of 2014.
HQ moving from Rochester to NJ
In the letter, Pearson writes, "we will operate our U.S. headquarters and new U.S. Eye Health business unit (B&L) in New Jersey."
In the letter, Pearson writes, "we are planning... to reduce significantly the regional structure currently in place at Bausch and Lomb."
Wall Street reacted well to Pearson's plan. Valeant's stock jumped $20 over the course of a couple of days after Pearson announced the deal to buy B&L and find the "cost synergies."
In the letter filed with the SEC, Valeant's Pearson writes, "I am confident we have a plan to treat all employees fairly during this transition period." Pearson writes that severance plans for employees in the United States "have also been finalized." Pearson writes, "we have made the decision to honor the respective severance plans currently in place at each company" and promised "appropriate support during transition to alternative employment."
B&L plant in Rochester
Finally, Pearson writes something about the B&L plant on N. Goodman Street in Rochester. "We will continue to operate all current manufacturing locations in the U.S., including Rochester, which is an important site given its manufacturing and R&D capabilities."
What we have learned so far...
I-Team10 has been digging into the impact of the purchase of B&L by Valeant.
Last week, I-Team10 reported that Greater Rochester Enterprise, a local economic development agency, is putting together a plan to handle more than 1,000 laid off B&L employees. GRE CEO Mark Peterson told the I-Team that his staff is contacting other companies, letting them know that there could be a pool of highly-skilled employees available for them to hire in the very near future.
Valeant's CEO met with Senator Charles Schumer last week. In a statement, Schumer's office said "Senator Schumer met with the CEO of Valeant and made an argument in the strongest terms that Bausch and Lomb is an outstanding company and that Valeant should keep all jobs in Rochester."
County Executive Maggie Brooks told the I-Team that the county has had conversations with Valeant management but says Valeant never indicated what it would do specifically to B&L employees in Rochester. I-Team10 asked Brooks if she thought the company owed it to her and the mayor of Rochester to let them know.
"I think the company does have a responsibility but at the same time they're a private company that has a responsibility to sustain itself into the future," Brooks said.
Local leaders respond:
Rochester Business Alliance President and CEO Sandy Parker issued the following statement in response to Valeant’s SEC filing and letter to employees announcing the move of Bausch + Lomb’s corporate headquarters to New Jersey: “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. However, it is encouraging that contact lens manufacturing is slated to remain here. 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. Bausch + Lomb’s highly skilled workforce is well-positioned to find other opportunities. We’re hopeful that our region’s business community will be able to retain much of this talent.”
Rochester Mayor Tom Richards said, "The size of the proposed Bausch & Lomb and Valeant workforce reduction worldwide is significant. It remains unclear how many of those jobs will be from Rochester. Regrettably, that uncertainty is bound to create anxiety to current B&L employees. Our thoughts are with the employees and their families who will be affected. However, Rochester has been through this before. We are a resilient community and hopefully, whatever the job losses will total, we hope those people will be absorbed by other area businesses and by new entrepreneurs."