Global contact lens supplier Bausch + Lomb (BLCO, Financial) saw significant gains today following reports that private equity firms TPG and Blackstone (BX, Financial) are considering a joint bid for the company. This development comes after previous reports indicated that BLCO was exploring a sale due to lender concerns over its separation from parent company Bausch Health (BHC, Financial), which is burdened with approximately $20 billion in debt. The potential acquisition has sparked investor excitement over the expected premium buyers might offer.
Investors are particularly optimistic as TPG and BX emerge as the leading buyers. BLCO's enterprise value, which includes its market cap and debt, was $11.45 billion as of Friday's close. Speculation suggests a possible acquisition price could reach $14 billion, representing a 28% premium over the recent closing price.
- BLCO has shown strong financial performance since its spin-off from BHC, with three consecutive quarters of at least 17% revenue growth and sustained profitability. The company is entering Phase 2 of its growth strategy, focusing on new product launches expected to drive activity in the second half of 2024 and into 2025.
- The FDA recently approved BLCO's enVista Envy full range of vision intraocular lenses, following Health Canada's approval in May. This approval enhances BLCO's position in the premium intraocular lens market.
While a takeover is not yet confirmed, the likelihood appears high due to BHC's financial challenges. BHC, which owns nearly 90% of BLCO, faces legal issues with Teva Pharma (TEVA, Financial) over the patent for its lead drug, Xifaxan. Additionally, BHC has $9 billion in maturities due around the same time it loses exclusivity on Xifaxan in 2028, raising solvency concerns. A deal for BLCO would provide much-needed cash for BHC to support its pipeline.
