Never saw it coming....
Eye-care firm to be bought by private equity shop Warburg Pincus for about $3.7B; shares jump above offer price.
CHICAGO (Reuters) -- Bausch & Lomb Inc., still dealing with a worldwide recall of products that reportedly cause eye infections and hit the eye-care company's financial results, said Wednesday it agreed to be acquired by private equity firm Warburg Pincus for nearly $3.7 billion.
Under the deal, Warburg Pincus will acquire all of the outstanding shares of Bausch & Lomb common stock for $65 a share in cash. It will also assume about $830 million in debt.
Shares of Bausch & Lomb (Charts) jumped about 9 percent above $65 in early trading, a sign that investors believe a higher bid may emerge.
The offer is only a 5.7 percent premium to where Bausch & Lomb shares closed on Tuesday, but its shares have been on rising for weeks on rumors it would be a target of a leveraged buyout.
The deal is not a surprise given the stock's action, Robert W. Baird analyst Jeffrey D. Johnson said. "This looks like a pretty fair deal," he said.
The share price's rise above $67 at the open - above the $65-a-share announced deal price - suggests speculation of a higher bid, Johnson said.
"If I were a shareholder here, I would not be expecting much upside from the $67," Johnson said.
Warburg Pincus has offered to pay nearly 28 times estimated 2007 earnings per share for the company, and 9.5 times estimated 2007 earnings before interest, taxes, depreciation and amortization, based on data from Reuters Estimates.
By going private, Bausch will be able to address its issues away from the investor spotlight, Johnson said. Those issues include dealing with product liability lawsuits and getting their accounting in order as the company has not yet become current in its SEC filings, Johnson said.
The company made a worldwide recall of its popular contact lens solution last year and was still recalling some product this year.
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.
CNN
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