Rochester, NY – Bausch and Lomb, founded over 150 years ago in Rochester, is entering into a merger agreement with Warburg Pincus, a private global equity firm, in a 4.5 billion dollar deal.
Warburg would acquire all of B&L's stock for 65 dollars a share. But that's lower than what company stock was trading for. Analysts say that could mean a rival bid will emerge.
George Conboy is president of Brighton Securities. He says there are advantages to Bausch and Lomb being privately owned. Conboy doesn't expect Warburg to buy the company and then sell off the pieces.
Under the terms of the agreement B&L can get out of the deal by paying a 40-million dollar break up fee if a better offer comes along from a third party.
Analyst T.C. Lewis with Greentree Capital Management would like to see a counter offer. He says Rochester would be losing a good community corporation if it's bought by a private equity firm. Lewis says much of B&L's charitable work in the community would cease if it was bought by a private equity firm.
Rochester Mayor Bob Duffy says he will fully support any effort that will allow Bausch and Lomb to continue to grow in Rochester. He said he hopes the change will allow for greater job growth and economic impact for Rochester.
The deal includes 3.5 billion in cash, and the assumption of over 830 million dollars in debt by Warburg.
Bausch and Lomb CEO Ron Zarella says the deal is good for the company's workers, customers and shareholders.
Conboy says the company's accounting difficulties, along with problems with its MoistureLoc products, are two reasons the company was put up for sale. Bausch and Lomb recently recalled its ReNu with MoistureLoc lens solution after it was suspected in an outbreak of eye infections.
A number of lawsuits by customers are pending.
In March, the company pulled another product -- ReNu MultiPlus solution -- off the shelves because trace amounts of iron were found in the product.
Bausch and Lomb has also been restating financial statements because of accounting problems tied to operations in Asia and Brazil.