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Abbott plans Solvay layoffs

Abbott has filed a restructuring plan showing that the company expects 3,000 job cuts as a result of its acquisition of Solvay

Abbott has filed a restructuring plan with the US Securities and Exchange Commission showing that the company plans to cut about 3,000 jobs as a result of its acquisition of the Belgian company Solvay Pharmaceuticals.

Almost all of the layoffs will be of Solvay employees based in Europe. The cuts will affect manufacturing, commercial operations, R&D, and staff functions.

The restructuring plan, which is expected to be implemented over the next two years, will likely result in a pre-tax charges of up to $1.3bn for Abbott, with about $650m of that amount earmarked for employee-related costs surrounding the layoffs and $215m related to the discontinuation of certain R&D programs.

Abbott expects $475m to $640m of the charges to occur in the second half of 2010. Because the charges will be recorded as specified items, existing earnings per share guidance will be unchanged for 2010.

The company said that improved efficiencies and streamlined operations should yield significant annual savings by 2012.

Abbott completed its acquisition of Solvay in a deal worth $6.2bn in February of this year. The takeover provided Abbott with a large and complementary portfolio of pharmaceutical products, helping to expand the company's presence in key global emerging markets.

The acquisition is expected to add around $2.9bn to Abbott's total reported sales for 2010, the majority of which will be outside the US. Solvay's product portfolio includes the testosterone gel AndroGel, the progesterone capsule Prometrium, and the pancreatic enzyme replacement therapy Creon (pancreatin).

22nd September 2010

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