Riiiiight.
What does strike us as plausible, though, is the notion that Fred, Brent and Warburg were recently adding layers to the management structure, to prepare for the return to the public company markets -- with global business unit heads in between the CEO/CFO level, and the operating in-country management CEO/CFO teams.
That sort of one over one checking will no longer be needed, now that Valeant will roll up all results to its Canadian public holding company. So, it is certain that the entire global business unit oversight teams (or, region management, if you prefer) will disappear under Valeant ownership, and be handled by legacy Valeant public company people resident in Canada.
All of this is from the CFO's mouth, a few days ago, at a. . . you guessed it! Goldman Sachs confab (transcript courtesy of SeekingAlpha.com), in Manhattan:
Howard Bradley Schiller - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Director
. . . .The areas where they probably didn't have enough time to get through yet, that we'll be able to get to quickly, is in the cost structure. They run their business as three global business units. As you all know, anyone who knows us well knows that we don't run global business units. We run a decentralized model. So they have three global business units. In addition, they have regional infrastructure. So Mike and I were in Europe last week, we kicked off the integration in Europe. And they have their three global business units and they have a European regional infrastructure. Then they'll have a country manager and then they'll have individual managers for each of the three business units underneath, with a complicated matrix between the global business units and regional structures. That's not how we're going to run the business.We're going to be true to our decentralized approach. So in any one country, they'll -- we have a country manager in Poland. We'll have -- continue to have one, but we'll have one person that deals with eye care in Poland, not four people to deal with eye care. We're not going to have regional European infrastructure nor are we going to have it in Latin America or Asia, and we will be running global business units. And that's where the bulk of the savings, just breaking down that infrastructure is going to come from. . . .
[T]hese buckets are moving around daily as we get deeper and deeper in our integration process. But the $800 million is probably roughly around $450 million in what I'll call G&A and R&D, and then $350 million in commercial. And a big piece of the commercial is where there's overlap. Anytime where there's real overlap, whether it be in G&A or commercial, we can take 80% to 90% of the cost out, and we've done that time and time again. In commercial, we also -- we're not a big believer in a lot of the marketing spend. We've talked about that pretty openly. So we're going to be pretty tough on and disciplined around marketing spend. In addition, on the G&A side -- in the commercial side, it's probably split, roughly 50-50 between FTE and non-FTE. But on the G&A side, we talked about the global business units. Well, first of all, they had a corporate structure on top of everything that was built for a public company, which, obviously, we don't need. We're not going to have the global business unit infrastructure, which we talked about, and we won't have the regional infrastructure. So those three layers will come out. . . .
So, look for the ad agencies on the contact lens business -- and the internal marketing staffs -- to shrink immensely, as Valeant takes over B + L. We will check in, from time to time, on this deal -- since it has such a strong odor of Fred, all about it.
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