Warburg Pincus agrees to acquire Bausch & Lomb for $3.67 billion

17 May 2007

Mumbai: Private equity firm Warburg Pincus has agreed to acquire eye-care company Bausch & Lomb Inc for about $3.67 billion.

The deal includes the right for Bausch & Lomb to solicit superior offers during the next 50 days. If a better deal is reached during that time, it will pay a $40 million break-up fee to Warburg Pincus.

The maker of contact lenses and ReNu contact lenses solution, among other eye-care products, Bausch & Lomb is still dealing with widespread product recalls that have delayed financial reports.

The offer, which also calls for the private equity firm to assume $830 million in debt, is only a 5.7 per cent premium to where Bausch & Lomb shares closed on Tuesday. But its shares have been on a sharp ascent for several weeks - up about 25 per cent since mid-March before today''s rally - due to rumours that it would be a target of a leveraged buyout.

Bausch & Lomb''s stock price immediately jumped above the $65 per share offer from Warburg Pincus - touching their highest level in more than a year - suggesting investors may expect a higher bid.

"The options market is saying the stock is worth more and the take-over bid should be closer to $69 or $70 a share," said an options analyst, who noted options activity in the past few sessions, reflected expectations of a bid.