Rochester, N.Y. – Advanced Medical Optics Inc. on Thursday offered to buy eye-care products rival Bausch & Lomb Inc. for $4.23 billion in cash and stock, topping a $3.67 billion cash bid by a private-equity firm.
The Santa Ana, Calif.-based company put in a $75-a-share offer of $45 in cash and $30 in stock for each Bausch & Lomb share.
Bausch & Lomb said its board determined that the offer “is bona fide and is reasonably likely to result in a superior proposal.”
It said it planned “to engage in further discussions” but cautioned that “there can be no assurances as to whether the AMO proposal will ultimately result in a transaction.”
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.
The new offer came on the final day of a 50-day period that Bausch & Lomb set aside for other buyers to make a better bid.
Under the deal with Warburg Pincus, Bausch & Lomb could solicit superior proposals until midnight Thursday but would have to pay a $40 million breakup fee if it accepts any other offer.
“I thought $65 was a fair offer, and so $75 obviously trumps that,” said analyst Jeff Johnson of Robert W. Baird & Co. in Milwaukee. “The go-shop provision is not over until 11:59 p.m. Theoretically, there could be other offers as well, and also Warburg, I’m sure, would have a chance to come back to the table if they’d want to.”
AMO chairman and chief executive Jim Mazzo said the bid is strategically and financially superior to Bausch & Lomb’s existing agreement with Warburg Pincus.
“The AMO and B&L businesses complement each other and together would provide increased scale, scope and the enhanced ability to generate productivity and efficiency improvements,” Mazzo said in a statement.
Advanced Medical Optics first disclosed its interest in acquiring Bausch & Lomb on May 24. The next day, it voluntarily recalled its leading contact- lens-care product after a federal investigation linked it to a rare eye infection.
Bausch & Lomb has been struggling to recover from the May 2006 recall of a contact lens cleaner blamed for an outbreak of severe eye infections. Federal regulators called ReNu with MoistureLoc, a $100 million-a-year product, the “potential root cause” of a flurry of potentially blinding Fusarium keratitis infections in the United States, Asia and other parts of the world.
