It hasn’t happened yet, but in today’s climate, there’s no reason it won’t: buyout rumors are swirling around Bausch & Lomb Inc. (BOL) for the past few days. The company’s stock hit a 52-week high on Monday, up almost 10%.
No comments here on the investment merit of the stock. There should be some questions about fairness to public shareholders, though, in the event of a buyout: the company hasn’t filed a 10-Q since July 2005. It finally filed its 2005 10-K in early February 2007. If it doesn’t file its 2006 10-K by April 30 - or obtain waivers from the terms of its public debt, as outlined in this late filing notice - it’ll be in default on its debt and face acceleration.
So - there is a pretty big information gap between the company and its public investors.
It’s obvious that the easy way to solve the problem for the company’s managers would be to sell the firm. Let someone else worry. But any deal involving management would seem to open up more than the usual conflicts of interests in a management buyout: they’d be the only ones having a real grip on the firm’s financial parameters, putting the public shareholders at a serious disadvantage in terms of fixing a fair price. Even a deal with another firm would be tough to pull off fairly: while a buyer might get to have a look inside the firm, they’d be at a distinct advantage to the public shareholders too.
Stay tuned. Maybe it’s just rumor, but if it turns out to be true, it could be pretty interesting.
BOL 1-yr chart: