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| Valeant Pharmaceuticals CEO J. Michael Pearson |
After rumors of balked-at price tags and an in-the-making IPO, eye care giant Bausch + Lomb will soon belong to Valeant Pharmaceuticals ($VRX) in exchange for $8.7 billion.
Under the deal, expected to close next quarter, Valeant will fork over $4.5 billion to Warburg Pincus, Bausch's current owner, and pay another $4.2 billion to pay the company's outstanding debt. After that, Valeant will fold Bausch into its existing eye care business while keeping the brand name, predicting combined 2013 revenue of $3.5 billion and at least $800 million in annual savings by next year.
The dermatology-focused Valeant is looking to Bausch to catapult it into the eye care market, and the company's implants, surgical devices, lenses and growing ophthalmic pharmaceutical offerings will make Valeant a global leader in the space, CEO J. Michael Pearson said.
"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," Pearson said in a statement.
Over the past year, Bausch has been expanding its non-OTC offerings to tap new markets, buying a German ophthalmology laser outfit in January to bolster its surgical presence. And, just this month, the company won FDA approval for the Trulign Toric intraocular lens and launched the Incise microincision intraocular lens in Europe, touting both devices as serving unmet needs in cataract surgeries. On the pharma side, Bausch paid $500 million last year for ISTA Pharmaceuticals, maker of proprietary ophthalmic treatments.
In the long run-up to the deal, Warburg was said to want about $10 billion for its eye care heavyweight, a price tag that scared off rumored suitors including Abbott Laboratories ($ABT) and Johnson & Johnson ($JNJ). But the private equity giant persisted, floating plans for an eventual IPO in what may have been an effort to inject some immediacy into the sale process.
Now, with Valeant signed on as the company's next owner, Bausch is confident it can keep growing its market share and pipeline, CEO Brent Saunders said.
"Valeant's acquisition of our company is a testament to the tremendous value our talented employees have created over the past several years," Saunders said in a statement. "... I am confident that under their stewardship, the Bausch + Lomb brand will continue to stand for excellence and innovation in eye health."
- read the announcement