Qiagen ($QGEN), a provider of sample and assay technologies, announced this week that it will cut about 8% to 10% of its 3,800 employees as part of an effort to "enhance productivity by streamlining the organization." The company hopes to redirect money to initiatives that will improve long-term profitability and drive growth and innovation. The project will start this year and run through 2012.
In a statement, Qiagen says it plans to streamline organizational structures throughout the company, and duplications between global, regional and local activities will be eliminated. It also plans to focus its R&D activities on certain areas, and some programs will be eliminated.
Implementation of this project is expected to generate annual pretax cost savings of about $50 million starting next year, and the majority of the savings will be reinvested into areas as defined by the company's strategic initiatives, according to a statement.
In addition, a pretax restructuring charge of about $70 million will be taken in Q4 2011, of which 30% is expected to involve cash-related charge components. Qiagen also expects to take a pretax restructuring charge of about $20 million during 2012 for additional restructuring measures related to this program.
"Strategic initiatives are in place to drive the next wave of growth at Qiagen," explains Qiagen CEO Peer Schatz in a statement. "Against a background of short-term challenges in both our business and the industry, we have initiated this project to work more efficiently and reallocate additional resources to these initiatives and prepare for future growth. The emerging opportunities and the speed at which the environment has changed led us to accelerate these plans and take action."
Qiagen's announcement didn't come as a surprise to some. "We believe [the streamlining] is at least partially a consolidation of the at least nine acquisitions Qiagen has done over the past three years," Mizuho Securities analyst Peter Lawson said in a research note, as quoted by GenomeWeb Daily News.
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