AP News, July 24th, 2007
Bausch & Lomb Inc. told eye-care products rival Advanced Medical Optics Inc. on Tuesday it needs to improve its takeover offer to compete with a $3.67 billion cash bid by a private equity firm.
Unless Advanced Medical provides extra assurances about the "value and certainty of consummation" of its $4.2 billion cash-and-stock bid, the board of Bausch & Lomb said the offer "would not be likely to result in a superior proposal."
It gave the Santa Ana, Calif.-based company until midday Friday to make revisions to its offer.
Warburg Pincus, a buyout and venture capital firm in New York, won an agreement from Bausch & Lomb's board in mid-May to pay $65 a share for the 154-year-old maker of contact lenses, ophthalmic drugs and vision-correction surgical instruments.
On July 5, Advanced Medical put in a $75-a-share offer of $45 in cash and $30 in AMO stock for each Bausch & Lomb share. The offer came on the final day of a 50-day period set aside for other buyers to make a better bid. Bausch & Lomb would have to pay a $40 million breakup fee if it accepts another offer.
Bausch & Lomb is concerned about whether Advanced Medical's shareholders would support a deal. Advanced Medical's third-largest shareholder, ValueAct Capital, has said it opposed the takeover move.
"Bausch & Lomb is telling AMO, you need to do better, you need to sweeten the bid," said Piper Jaffray analyst Mark Mullikin.
"The Bausch & Lomb board is indicating they want some additional assurance that AMO either has the votes or they want maybe more cash in the bid to make it a better deal," Mullikin said in a telephone interview from Minneapolis. "And if they don't get that, it sounds like they're going to declare the Warburg Pincus offer the superior bid."
In a letter to Advanced Medical's chief executive, Jim Mazzo, Bausch & Lomb's board said it was unlikely to endorse the offer unless it sees "concrete, credible evidence that holders of a significant percentage of the outstanding AMO shares would affirmatively support the proposed acquisition."
Bausch & Lomb posted $2.3 billion in sales last year and employs about 13,000 employees, while Advanced Medical Optics recorded $998 million in sales in 2006 and had 3,300 employees.
Advanced Medical Optics, which makes artificial lenses and other medical devices for the eye, bought Visx Inc., a maker of laser eye surgery devices, in a deal last year valued at about $1.25 billion in cash and stock. In the lens solution market, it is a No. 3 player behind Alcon Inc. and Bausch & Lomb.
