Advanced Medical Optics (AMO) announced yesterday that it was interested in making a bid for Bausch & Lomb, adding that it was a logical move ?given the highly complementary nature? of the two businesses. In addition to its own eye care products, AMO sells medical devices for laser eye surgery, as well as for operations related to glaucoma and cataracts..
AMO is entering a ?go shop? process for one of the leading suppliers of contact lenses and solutions, whose share price has suffered badly from the recent publicity about a major product recall. The process, which may not have ended yet, began last week when B&L announced that it had entered a definitive agreement with Warburg Pincus, a global private equity firm, to be acquired in exchange for cash and shares in a transaction valued at $4.5 billion, including $830 million in debt.
Under terms of the agreement, B&L was given 50 days to accept superior proposals from third parties. However, should the company accept another offer, like one from AMO for example, the company would be obligated to pay a $40 million break-up fee to affiliates of Warburg Pincus.
Warburg Pincus has agreed to purchase all outstanding shares of B&L's common stock at $65.00 per share, representing a 26 percent premium over the stock's average value over the 30 days prior to original press reports of a possible acquisition. The transaction would essentially de-list B&L from public trading. A representative of B&L's board said the move would be in the best interest of the company and its shareholders, adding that, as a private company, B&L would have ?greater flexibility to focus on our long-term strategic direction.?
AMO said it believes the current engagement between B&L and Warburg Pincus undervalues B&L. The company said it plans to explore a higher offer, but added that it would first conduct ?thorough due diligence.? On April 2, AMO completed its $808 million acquisition of IntraLase, a company that specializes in lasers for refractive surgery, a business in which B&L is involved, too.
Preliminary unaudited financial data for B&L's 1st quarter indicate that the company's consolidated net sales went up by 6 percent to $578.9 million, growing by 2 percent in constant currencies. Turnover fell by 2 percent in the Americas, mainly because of remaining tremors from the recall of its MoistureLoc solution, offset by growing sales of contact lenses, pharmaceuticals and cataract/vitreoretinal products. Turnover in contact lenses rose by 7 percent, due to increased sales of spherical and specialty products.
Net earnings for the 1st quarter are estimated to have been $19.2 million, as compared to earnings of $11.8 million in the year-ago period. For the full year, B&L is maintaining a sales projection of $2.5 billion. Income before interest and taxes (EBIT) is expected to total about $240 million. Operations in the USA should improve throughout the year, but would still remain unprofitable. B&L has notified the U.S. Securities and Exchange Commission that it will be late in filing its quarterly report for the 1st quarter.
Separately, B&L recently named Joe Barr as vice president of global research and development for its vision care business. He will begin in July, reporting directly to Praveen Tyle, B&L's senior vice president of global R&D and chief scientific officer. Barr was previously associate dean for clinical services and professional programs at Ohio State University's College of Optometry.