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Allergan to spin off eye
surgery and contact lens care business as Advanced Medical Optics
IN
a move that company sources say will make its eye-care business
more competitive in a tightening global market, Allergan Inc has
announced it will spin off its ophthalmology device and contact
lens care businesses into a new, publicly traded and independent
corporation.
The target date for the spin-off of Advanced Medical Optics Inc
is 28th June.
The transaction is structured to be tax-free, with each Allergan
shareholder receiving one share of the new Advanced Medical Optics
for every four-and-one-half shares of Allergan they own. The new
firm will trade under the symbol AVO on the New York Stock Exchange
with about 28.7 million shares outstanding.
The primary reason for the spin off is that there are two
different businesses currently within Allergan. One is strictly
a pharmaceutical business and the other is a medical device business.
The regulatory, distribution and customer mindset is very different
for each business. This spin will allow each business to have increased
focus and continue its strong performance.
The Surgical and Contact Lens related businesses, on a constant
currency basis, have demonstrated growth. The Surgical business
continues to excel due to its innovative technology coming from
their small incision foldable IOL product line as well as the penetration
of its new Phacoemulsification system, Sovereign. Contact Lens Care
outside the United States is demonstrating strong growth with Complete
with its unique comfort formulation. The United States Contact Lens
Care market has undergone a change over the last several years.
The whole industry has seen a change in the inventory levels causing
a decrease in the overall market size. In addition AMO’s management
decided to pull out of the low margin private label business in
the US
The spin off will allow AMO to: focus its management,
R&D investments and strategic opportunities; leverage a strong
infrastructure for existing and new technologies as well as alliances
and partnerships; utilise its strong financial position to introduce
new products through its R&D function as well as expand in growing
geographies.
The spin-off will free both management and revenues generated
by Allergan’s eye-care operations to benefit those business
lines directly, according to Mr James V Mazzo who will take over
as the new CEO of Advanced Medical Optics.
“Our core businesses, the ophthalmic surgical business
and the contact lens care business, maintain market-leading positions
and are highly respected and well established amongst our customers
and, importantly, are financially strong,” says Mr Mazzo.
“With a renewed focus on these businesses and a commitment
to our strategic vision, we will endeavour to generate sustained,
accelerated revenue and earnings growth,” adds Mr Mazzo who
is currently President of Allergan’s Europe/Africa/Middle
East region and global head of Allergan’s ophthalmology surgery
product line.
AMO has hired a large percentage of its team. The structure was
always broken out by separate sales forces as well as customer service
and R&D. This will allow for a transparent affect on its customer
base.
In addition, the Executive Team of AMO has a unique blend of Allergan
experience as well as bringing in several new people with experience
in the financial, business development and strategic planning areas.
“AMO aspires to be a leader in vision improvement by developing
a suite of innovative technologies and devices which address a broad
range of refractive eye disorders, while also driving strong revenue
and earnings growth,” he says.
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