Bausch & Lomb To Be Taken Private for $4.5B; Traders Anticipate Higher Bids

Eye-care company Bausch & Lomb said Wednesday it has agreed to be acquired by private equity firm Warburg Pincus for $65/share, a 5.7% premium over Tuesday's close, and about a 26% premium to its average 30-day share price prior to media rumors of a possible buyout. Including the $830 million in debt it will assume, the total price tag amounts to about $4.5 billion. Bausch & Lomb shares are trading up 10.4% at $67.89 -- indicating investors apparently anticipate a bidding war. Robert W. Baird analyst Jeffrey D. Johnson didn't see much room for shares to move up: "This looks like a pretty fair deal... If I were a shareholder here, I would not be expecting much upside from the $67 [price]." The price tag is 29.5x 2007e EPS of $2.13 and 9.5x 2007e Ebitda [earnings before interest, taxes, depreciation and amortization]. Johnson said going private would allow the company to address its problems (product recalls and accounting issues) out of the limelight. The company last year underwent a massive recall of its ReNu with MoistureLoc contact lens solution after it was associated with a rare fungal eye infection that can cause blindness; this year it made a limited recall of its ReNu MultiPlus solution. CEO Ronald Zarrella: "As a private company, Bausch & Lomb will have greater flexibility to focus on our long-term strategic direction." The deal allows Bausch & Lomb to solicit superior offers for the next 50 days, and carries a $40 million break-up fee.

Sources: Press release (.pdf), Reuters, MarketWatch
Commentary: Bausch & Lomb Could Be Heading Toward a Buyout, But Based On What? • Fisher's Buyout Candidates • Bausch & Lomb: Overblown Concerns, Cheap Stock
Stocks/ETFs to watch: Bausch & Lomb Inc. (BOL). Competitors: Alcon Inc. (ACL), Advanced Medical Optics Inc. (EYE), Cooper Companies Inc. (COO)

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Comments

[Mr. Finance:]

Here is an excerpt from today's post on the NewsVisual.com blog titled "Warburg Pincus is Deeply COnnected to Bausch & Lomb"

An IntellectSpace Knowledge Map of Bausch & Lomb's common relationships with Warburg Pincus, involving board, executive, non-profit, investment and other business ties reveals an interesting picture about who was involved in bringing the deal together.

John Purcell, a former but a long time board member of B&L shared a board seat with senior Warburg Pincus leaders including John Vogelstein and Sidney Lapidus through board seats on Journal Register Company and Information Holdings (Ih). As a matter of fact, Warburg Pincus had a direct equity position in Information Holdings as noted in the SC 13 and Form 4 filings (green line between Ih and Warburg Pincus on the Knowledge Map).

Ronald Zarrella, current board member of Bausch & Lomb, currently shares a board seat with Avaya, that is deeply connected to Warburg Pincus directly (through an equity position - green line), and indirectly (through a common board members - Joseph P Landy - blue line).

Lastly, Jonathan S Liden, a board member of Bausch and Lomb, shares a membership on the Council on Foreign Relations with Charles R Kaye and Henry B Schacht, both of whom are deeply connected into Warburg Pincus (thick red/blue lines).

For an interactive version of the Knowledge Map that at a single glance depicts the aforementioned relationships, navigate to or paste the the following URL into your Internet Explorer browser: fn.intellectspace.com/...

2007 May 16 06:04 PM