ROCHESTER, N.Y. – Bausch & Lomb Inc. (BOL), the eye-care product maker beset by product recalls and accounting woes, agreed to be acquired by private equity firm Warburg Pincus for about $3.67 billion in cash, the 154-year-old company said Wednesday.
Warburg Pincus agreed to pay stockholders $65 per share, an amount Bausch said represents a 26 percent premium to the average price of the stock over the 30-day period when rumors began circulating about a possible buyout. Warburg Pincus also will take on about $830 million of debt in the deal.
Shares of Bausch & Lomb rose $5.45, or 8.8 percent, to $66.95 in morning trading, suggesting that investors may expect a rival bid to emerge.
Bausch & Lomb said it can solicit superior proposals from third parties during the next 50 calendar days. Should it find and accept such an offer, Bausch & Lomb would be obligated to pay a $40 million break-up fee to affiliates of Warburg Pincus.
A special committee of Bausch & Lomb's independent board members recommended that shareholders vote for the deal.
Bausch & Lomb booked $2.29 billion in sales in 2006, down nearly 3 percent from 2005. It employs about 13,000 people.
A year ago, the 154-year-old company permanently withdrew its new-formula ReNu with MoistureLoc multipurpose contact lens cleaner from markets around the world when federal regulators called the $100 million-a-year product the "potential root cause" of an outbreak of potentially blinding infections.
A cluster of the infections surfaced in Asia in fall 2005 and an unusual number of victims began showing up in U.S. eye centers that winter.
Lawyers expect several hundred people will seek damages for Fusarium keratitis infections in trials beginning as early as this summer. Of the 180 infection victims confirmed so far in 35 states, 59 needed cornea transplants to try to restore their vision, the Centers for Disease Control and Prevention in Atlanta said. Several people allege the MoistureLoc solution caused them to lose an eye.
More recently, the company recalled about 1.5 million bottles of ReNu MultiPlus solution in March because trace amounts of iron could cause the cleaner to lose effectiveness earlier than normal.
On the accounting front, the company has been working to restate past financial statements following revelations in late 2005 and early 2006 of improper bookkeeping in Asia and Brazil.
Morgan Stanley advised Bausch & Lomb on the takeover deal, while Banc of America, Citicorp, Credit Suisse and JPMorgan advised Warburg Pincus.
"As a private company, Bausch & Lomb will have greater flexibility to focus on our long-term strategic direction to be a global leader in providing innovative and technologically advanced eye health products to eye care professionals and consumers," Chief Executive Ron Zarrella said.
"We are proud to partner with Warburg Pincus, a distinguished firm with a strong reputation and proven track record of success in acquiring and guiding healthcare companies."