Advanced Medical Optics drops bid to acquire B&L

After Bausch & Lomb Inc. for all practical purposes rejected Advanced Medical Optics Inc.’s $75 a share bid and strongly reaffirmed its commitment to be acquired for $65 a share by Warburg Pincus LLC, AMO today dropped out of the race to acquire the Rochester eye-care company.
In a brief letter to the Bausch & Lomb board dated Aug. 1 and filed with the Securities and Exchange Commission, a clearly disappointed AMO chairman and CEO James Mazzo complained that “unrealistic hurdles … have been uniquely imposed on Advanced Medical Optics Inc.
“You do not have any interest in providing your shareholders with the opportunity to receive the $75 per share offer,” Mazzo chided.
A preliminary proxy statement filed earlier today by Bausch & Lomb with the Securities and Exchange Commission states that the firm’s board unanimously recommends that Bausch & Lomb shareholders approve Warburg Pincus’ all cash deal.
And though the proxy did not completely shut the door on AMO’s offer to pay $45 in cash and $30 in AMO stock for Bausch & Lomb shares, it left scant room for the bid’s approval.
“There are substantial uncertainties as to the potential value of the $75 AMO proposal and as to the ability of AMO to consummate the proposed transaction,” Bausch & Lomb’s proxy states.
According to the filing, Bausch & Lomb in a letter sent Wednesday told AMO that it would not drop a demand that AMO meet a Friday deadline to prove that AMO shareholders would OK a merger, a deadline that AMO has previously said would be impossible for it to meet.
The proxy and today’s letter follows a clipped exchange of letters between Bausch & Lomb director William Waltrip and Mazzo over the last several days.
Waltrip, who chairs a special Bausch & Lomb board committee overseeing acquisition offers, first told Mazzo that AMO would have to show that it could get shareholder approval for a takeover by noon on Aug. 3. The demand follows statements by a 14.7 percent AMO shareholder that it would strive to block any AMO attempt to acquire Bausch & Lomb.
Mazzo responded to Waltrip Tuesday with a reply giving Bausch & Lomb until this morning to meet AMO’s demand for more time to convince AMO shareholders to go along with the sale.
If AMO could not provide the requested assurances by 12 p.m. Eastern Daylight Time on Aug. 3, the proxy states, Bausch & Lomb would no longer consider it a legitimate bidder.
In a final dig, Mazzo closed the Aug. 1 letter by asking that “if in the future (Bausch & Lomb directors) decide to run a process that is designed to deliver value to your shareholders, please let us know.”
Separately, Bausch & Lomb Wednesday said it has acquired Soothe emollient eye drops from Alimera Sciences. Financial terms of the deal were not disclosed.
The local company said it plans to establish a broader line of professionally recommended, over-the-counter products to relieve dry eye symptoms. Bausch & Lomb will initially focus on two technologies, each designed to target a different layer of the tear film. The company also has begun shipping a new over-the-counter formulation, Soothe Lubricant Eye Drops Long Lasting Relief Preservative Free.
This transaction follows Bausch & Lomb’s December 2006 purchase of Alimera’s over-the-counter allergy franchise.
“Our pharmaceutical business continues to grow, due in part to the expansion of our (over-the-counter) product lines,” said Gary Phillips M.D., corporate vice president and global pharmaceutical category leader for Bausch & Lomb, in a statement. “The Soothe brand acquisition further strengthens our portfolio and provides a first-rate platform for further line extensions in this fast-growing segment of the ophthalmic industry.”

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