Back in July 2012, various financial press outlets were reporting that B + L would likely IPO by year end.
That no longer seems to be the case as Ex-CEO of Schering-Plough (the company that became New Merck, in a complex reverse merger), one "Fast" Fred Hassan, sitting in his current role as Chairman of B + L, has retained Goldman, Sachs Group, Inc. to seek strategic buyers. As we parse likely pricing, don't forget that B + L loaded its balance sheet with around $3.2 billion of debt, when it acquired ISTA. So, I color me slightly skeptical about a $10 billion final intact company valuation, athough that is reported to be what one person familiar with the rumors claims will be the ask.
Certainly these potential buyers will haircut the price, to compensate for that extra ISTA leverage I mentioned. And, in any event, with the current IPO market looking choppy (at best), I'm not so sure a Bausch & Lomb initial public equity offering would attract enough interest -- at the prices Mr. Hassan needs, at least -- to satisfy his Warbug Pincus backers. It was only 2007, afterall, when they took it private for $3.7 billion.
Then, as I say, Warburg layered on $3.2 billion of incremental leverage. And while they've streamlined some operations, B + L remains one of several second-tier players, in this space. As ever, we shall see.
From Bloomberg overnight, then -- a bit -- do go read it all:
. . . .Warburg Pincus bought the Rochester, New York-based company for $3.7 billion in September 2007 after the eye-products maker was marred by accounting errors, lawsuits and the recall of one of its contact lens solutions. Goldman this month contacted health-care companies such as Sanofi, GlaxoSmithKline Plc and Merck & Co., one person said. Other companies, such as Abbott Laboratories, also will be contacted, according to that person. Warburg Pincus had talked to financial advisers about taking Bausch & Lomb public, the person said. The New York-based private-equity firm chose Goldman Sachs to run a limited sales process, and if a buyer can’t be found Warburg Pincus may pursue an IPO, according to the person. . . .Do stay tuned -- Fred's deal goggles are back on -- with a vengeance!
2 comments:
So, will Merck bite?
http://www.fiercepharma.com/story/sanofi-merck-others-said-be-eyeing-bausch-buyout/2012-12-12
I'd be shocked if Mr. Frazier wants the lower margin, lower growth lines that characterize B + L -- especially since the most promising pipeline products are pretty far off, at present.
Couple that to the notion that Warburg, and Mr. Hassan, want to get $10 billion for a ~$3 billion in annual sales revenue company. . . makes this an unlikely fit for Merck.
My best guess is -- true to prior form -- that Mr. Hassan will end up presiding over a bust-up, not an intact sale.
Namsate -- do stop back!
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