ROCHESTER, N.Y. (AP) – Shares of Bausch & Lomb Inc., which recently agreed to a $3.67 billion buyout by a private equity firm, climbed more than 5 percent Thursday after Advanced Medical Optics Inc. disclosed that it might make a higher bid for its eye-care products rival.
Warburg Pincus, a New York-based buyout and venture capital firm, said last week it won an agreement from Bausch & Lomb's board to pay $65 a share for the 154-year-old maker of contact lenses, ophthalmic drugs and vision-correction surgical instruments.
“We believe that the current transaction with Warburg Pincus undervalues Bausch & Lomb,” Advanced Medical said Thursday without quantifying its potential bid. “We plan to enter the go-shop process with the intention of exploring a superior offer for the company.”
Bausch & Lomb's stock rose $3.57, or 5.3 percent, to $70.02 in late afternoon trading on the New York Stock Exchange, while Advanced Medical shares fell $1.47, or more than 3 percent, to $40.96.
Under the deal with Warburg Pincus, Bausch & Lomb can solicit superior proposals from third parties until early July but would have to pay a $40 million break-up fee if it accepts any other offer. Analysts think Advanced Medical's intervention might bring a higher offer from Warburg Pincus.
Based in Santa Ana, Calif., Advanced Medical bought Visx Inc., a maker of laser eye surgery devices, in a deal last May valued at about $1.25 billion in cash and stock. Last month, it acquired IntraLase Corp. of Irvine, Calif., a vision-correction laser maker. It had 3,300 employees and $998 million in sales in 2006.
“They're far and away the leader in the refractive surgery market after taking out VisX and IntraLase,” said analyst Jeff Johnson of Robert W. Baird & Co. in Milwaukee. “They have a 50 percent market share. Bausch is a smaller player at 10 percent or so, and Alcon Inc. is (also) at 10 percent.
Advanced Medical also sells contact lenses cleaners but “they are a No. 3 player behind Alcon and Bausch & Lomb,” Johnson said.
Acquiring Bausch & Lomb, a far bigger company with $2.3 billion in sales last year and about 13,000 employees, “would be transformational,” he added.
Bausch & Lomb has been struggling to recover from last spring's global recall of a contact lens cleaner blamed for an outbreak of severe eye infections.
Federal regulators called its ReNu with MoistureLoc multipurpose contact lens cleaner, 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.