Advanced Medical outbids Warburg Pincus with $4.23 billion offer for Bausch & Lomb

Mumbai: Medical supply company Advanced Medical Optics has offered to buy larger eye-care company Bausch & Lomb for $75 a share in a cash-and-stock deal, the two companies said.

Advanced Medical has a market capitalisation of about $2.1 billion against Bausch & Lomb's larger capitalisation of $3.7 billion.

The offer values Bausch & Lomb Inc. at $4.23 billion against private equity firm Warburg Pincus's offer of $3.67 billion.

Advanced Medical's offer of $75 a share has a cash component of $45 and a stock offer of $30, the companies said. This compares with Warburg Pincus's offer of $65 a share in May.

The takeover agreement with Warburg Pincus allowed Bausch & Lomb to solicit other bids for 50 days. Bausch & Lomb said its board will consider the improved offer from Advanced Medical, but is not sure of an agreement.

Advanced Medical makes laser-vision correction tools, contact lens cleaning solutions and other products. The acquisition of Bausch & Lomb will fill add contact lenses and eye glasses to its product line and provide it greater exposure to the Latin American and Asian markets.

Advanced Medical had previously said the Warburg Pincus offer undervalued Bausch & Lomb, and said it would consider an offer of its own.

The Warburg Pincus bid had offered a 5.7 per cent premium to the closing price of Bausch & Lomb shares on 15 May. The stock had, however, risen about 25 per cent since mid-March on rumors the company would be acquired.

Advanced Medical, meanwhile, is expecting a loss in 2007 due to the impact of a recall. The company had in May announced it was recalling and halting shipments of its Complete MoisturePlus contact lens solutions after data showed a higher risk of eye infections among its users. As a result, the company kept its proposed offer for Bausch & Lomb in abeyance.

Advanced Medical's bid, however, would face a tougher regulatory review since the two companies have some overlapping businesses, and that could prolong the closing of a deal, analysts said. Meanwhile, hedge fund SAC Capital Advisors said it had acquired a 5.5 per cent stake in Bausch & Lomb.

According to Advanced Medical's proposal, the company will have up to 12 months to close the transaction. The deal is subject to regulatory approvals, approval by both companies' shareholders and the termination of Bausch & Lomb's prior agreement with Warburg Pincus.

Advanced Medical Optics, which currently does not make contact lenses, had been eyeing Bausch & Lomb's $710 million lens business and $658 million optical drug line to add to its own eye-care offerings.