Goldman: Higher Bid for Bausch & Lomb Unlikely; Johnson & Johnson, Alcon Rally

Includes: ACL, JNJ, VRX
by: FP Trading Desk

The US$65 per share takeover offer from private equity firm Warburg Pincus for Bausch & Lomb Inc. (BOL) sent shares in the eye care products maker higher than the bid price on Wednesday afternoon.

While Bausch’s independent committee recommended the offer, the company is allowed to solicit other offers during the next 50 days. If it agrees to a higher competing bid, Bausch will have to pay Warburg a US$40-million break-up fee.

The company, which has been plagued by both product and accounting problems, had been the subject of ‘for sale’ rumors for about a month.

Goldman Sachs analyst Lawrence Keusch thinks there is a low probability of a superior bid from any other eye-care company such as Johnson & Johnson (NYSE:JNJ) or Alcon Inc. (NYSE:ACL). Both company’s shares rallied on the news.

These companies and others in the consumer products space are likely only interested in specific portions of Bausch’s business and are probably wary of the company’s ongoing Federal Trade Commission concerns, Mr. Keusch said in a note to clients.