AMO completes $1.27 billion purchase of VISX

July 15, 2005

With the deal complete, AMO will turn up the heat on its marketing of VISX technology.

The acquisition, which was finalized May 31, unites two leaders in different ophthalmic segments to create one company with strengths in ophthalmic surgical devices and eye-care products as well as laser vision correction.

Shareholders of AMO and VISX voted May 26 to approve the $1.27 billion deal, which gives VISX shareholders 0.552 shares of AMO stock and $3.50 for each share of VISX common stock. AMO stockholders own 58.5% of the combined company, while VISX stockholders own 41.5%. The company has begun to trade on the New York Stock Exchange under the ticker "EYE."

The deal's completion has reassured investors, including Morgan Stanley, which resumed coverage of the company with an "overweight" rating.

"We believe the VISX deal creates a larger and stronger player, as AMO has quickly moved the med-tech ophthalmology space to an oligopoly, also including Alcon and Bausch & Lomb," the firm announced in a prepared statement. "AMO once again can spread a larger revenue base over a smaller incremental expense base, as it just recently did with the acquisition of the Pfizer products."

Earlier in 2004, AMO bought Pfizer's cataract surgery business for $450 million, and in May it announced plans to acquire Quest Vision Technologies Inc., with whom AMO had been working on accommodating IOL designs. Terms of the Quest Vision deal were not disclosed.

Morgan Stanley described AMO's 2-year history since its spin-off from Allergan as a "very strong run." The VISX deal should provide the company with "currency" for additional transactions, partnerships, and internal growth, it said.

Despite its aggressive acquisitions, AMO has chosen its transactions to improve cash flow and maintain financial flexibility, according to Randy Meier, AMO's executive vice president and chief financial officer.

"Over the last few years, we have had the good fortune to benefit from a fairly robust global economy, which has allowed us to execute our business plan and achieve sustained profitable growth through a combination of revenue growth and margin expansion," Meier said. "In doing so, AMO has and is enjoying the benefits of a rising stock price, an improved credit profile, and an expanding cash flow. All of these elements have contributed in establishing AMO as a credible player in the mergers and acquisitions marketplace with a full complement of powerful tools-cash, debt, and stock-to identify and close transactions that facilitate growth."

With the deal complete, AMO will turn up the heat on its marketing of VISX technology to increase physician understanding of all it can offer.

Russ Trenary, AMO's vice president and chief marketing officer, said many surgeons are unaware of "groundbreaking" technology, and AMO sales representatives-who were already visiting many of the same doctors before the VISX merger-now can present doctors with a total package of solutions for refractive or cataract needs.

"The refinements that VISX has come out with are not 'top of mind' to the doctors around the world right now," Trenary said. "We have a beautiful opportunity. We have the high road on technology and nobody knows it."