AMO withdraws offer for Bausch & Lomb

Advanced Medical Optics Inc. (AMO) has withdrawn its $75-per-share cash-and-stock offer to acquire Bausch & Lomb. Warburg Pincus LLC has offered to purchase Bausch & Lomb for $65 cash per share in an acquisition valued at about $3.7 billion (Ophthalmology Times, June 1, 2007). Bausch & Lomb shareholders are scheduled to vote on the offer Sept. 21 in Bausch & Lomb's headquarters in Rochester, NY.

Key Points

The private equity firm has offered to purchase Bausch & Lomb for $65 cash per share in an acquisition valued at about $3.7 billion (Ophthalmology Times, June 1, 2007). Bausch & Lomb shareholders are scheduled to vote on the offer Sept. 21 in Bausch & Lomb's headquarters in Rochester, NY.

James V. Mazzo, AMO chairman, president, and chief executive officer, withdrew his company's $4.3 billion offer Aug. 1 after a flurry of letters with Bausch & Lomb's special committee (Ophthalmology Times, July 15, 2007). A July 10 public letter from ValueAct Capital, a majority shareholder with 14.7% of AMO's common stock, said it believes the company's proposed acquisition poses an "unacceptable risk."

On July 27, Mazzo said he was so confident in shareholder approval, he offered Bausch & Lomb $50 million-up from the agreed upon $35 million-if he should fail to win support. Bausch & Lomb's committee declared that amount was insufficient, and on July 29, it raised the stakes, asking for "direct confirmation" that AMO has the support of enough stockholders with "sufficient AMO shares to approve the transaction." The committee wanted proof by Aug. 3, several weeks earlier than Mazzo said he could deliver it. It also declined to meet to negotiate with Mazzo.

In his Aug. 1 letter, Mazzo said he was "disappointed" that Bausch & Lomb's board did not give his company adequate time to provide assurances that the deal would be approved. He said the committee imposed "unrealistic hurdles" on AMO and remained "intent on delivering Bausch & Lomb to Warburg Pincus" in a deal he believed was "inferior."

"If, in the future, you decide to run a process that is designed to deliver value to your shareholders, please let us know," Mazzo wrote.

AMO spokesman Steve Chesterman said Mazzo declined to discuss his thoughts on the potential acquisition. In the Aug. 2 conference call with investment analysts, Mazzo said he had moved on.

"Candidly, the process is over, I'm even forgetting what we're talking about. To be very honest with you, we're done," he said. "The good news is it took some of my time and some people writing letters, but because we never really got involved in the process, it didn't take anybody else's time, so I have more time to talk about our business."