Bausch & Lomb (BOL-NYSE) announced today that it has entered into a definitive merger agreement with affiliates of Warburg Pincus, the global private equity firm. The transaction is valued at approximately $4.5 billion, including approximately $830 million of debt. Bausch & Lomb common stock will be acquired for $65.00 per share in cash.
While this is a tiny premium to today’s price the companies are claiming this is a 26% premium over the volume weighted average price of Bausch & Lomb’s shares for 30 days prior to press reports of rumors regarding a potential acquisition.
Bausch & Lomb’s Board of Directors, following the recommendation of a Special Committee composed entirely of independent directors, has unanimously approved the agreement and recommends that Bausch & Lomb shareholders approve the merger.
The transaction is subject to certain closing conditions: the approval of Bausch & Lomb’s shareholders, regulatory approvals, and the satisfaction of other customary closing conditions. There is no financing condition to consummate the transaction. Bausch & Lomb does have a go-shop alternative where it may solicit superior proposals from third parties during the next 50 calendar days and Bausch & Lomb would only be obligated to pay a $40 million break-up fee to affiliates of Warburg Pincus.
Shares of Bausch & Lomb closed at $61.50 yesterday and its 52-week high was $62.26. Shares are trading north of the buyout price because there are obvious hopes that this would represent a sheer giveaway and hopes of a higher bid. For some reference, this stock traded in the $70’s in the late 1990’s and had been over $80.00 in recent years. This may be far from over.
Jon C. Ogg
May 16, 2007
Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.
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