Analyst call with Allergan execs stokes anticipation of a plan to split the company in ‘a month or two’
So what’s up at Allergan?
Earlier this week the ubiquitous Evercore ISI analyst Umer Raffat was on the line with company executives to probe into the latest on the numbers as well as CEO Brent Saunders’ recent declaration that he’d be doing something definitive to help long-suffering investors who have watched their shares dwindle in value.
He came away with the impression that a significant company split is on the way. And not on some distant time horizon.
Early on in the call, Manisha Narasimhan — the new VP, Investor Relations & Strategic Initiatives who joined the company from Regeneron last fall — fielded Raffat’s question, which centered around rumors he’d been hearing that a split could just involve a small chunk of the company’s assets.
Here’s Narasimhan’s response:
We are evaluating all options, as Brent has said. There is a continued sense of urgency both for management and the board for ways that we think would unlock value. We’re working as quickly as we can and we hope to be in a position to be able to make an announcement over the next couple of months — I would say in a month or two.
Adding up the comments from the call, and Raffat was ready to speculate that a split is on its way, soon. Raffat’s thought:
By FAR the #1 highlight from the call: I walked away with the sense that Allergan is heading towards a split and may likely lay out timelines. We may get an update in “next couple of months”. (I think there is an announcement coming on 2Q earnings call.)
Which is just a few weeks away.
Saunders just spent months fending off calls for a different kind of split, as activists piled on the criticism of Saunders’ performance and called for an independent chairman to come in and take one of the CEO’s 2 titles, forcing a reckoning of some kind over the direction of the company. Saunders was successful, but the deep unrest among investors has become palpable to everyone. And adding Bob Hugin as an independent board member to focus on deals wasn’t enough to calm the rebellious.
“Let me be clear. I share that frustration, I understand that frustration,” the CEO said during the Q1 call a few weeks ago. “I am a very large shareholder relative to my own personal holdings in Allergan. Same as the managers. The board is on it. The board is engaged. Stay tuned.”