Valeant eyes Bausch & Lomb for $8.7B

The Canadian pharmaceutical company sees synergies with its existing ophthalmology businesses.

By MSN Money Partner May 28, 2013 1:02PM

Fox BusinessBausch & Lomb eye care products on display © Paul Sakuma/APBy Matthew Rocco

 

Valeant Pharmaceuticals (VRX) said late Monday it agreed to buy contact-lens maker Bausch & Lomb for $8.7 billion, giving Valeant a larger footprint in the $30 billion global market for eye-care products.

 

Shares jumped 10.7% in pre-market trading Tuesday, and were up over 7% by midday. The stock has risen over 40% so far this year.

 

The Montreal company will integrate its existing ophthalmology businesses into the newly acquired Bausch & Lomb division, creating a global eye-health unit with estimated 2013 revenue of more than $3.5 billion.

 

"Bausch & Lomb's world-renowned brand, comprehensive portfolio of leading eye care products, and promising late stage pipeline are an ideal strategic fit for our current ophthalmology business and we are strongly committed to continuing to build a sustainable eye health business," Chairman and Chief Executive J. Michael Pearson said in a statement.

 

Valeant added that approximately $4.5 billion of the purchase price will go to an investor group led by Warburg Pincus, while about $4.2 billion will be used to repay Bausch & Lomb's outstanding debt.

 

Warburg Pincus leads the group of private equity firms that owns Rochester, N.Y.-based Bausch & Lomb. In 2007, Warburg Pincus took the company private in a $3.7 billion leveraged buyout.

Valeant expects to achieve at least $800 million in annual cost savings by the end of next year.

 

The generic drug maker also expects its earnings to receive an immediate boost from the Bausch & Lomb acquisition.

 

On a conference call with analysts Tuesday, Pearson said Valeant continues to take with potential suitors about a "merger of equals." He added that another major transaction in the near-term is unlikely, as Valeant is looking at smaller acquisitions.

 

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