Warburg Pincus will likely raise its $3.67 billion bid to acquire Bausch & Lomb Inc., but it may still win the takeover battle for the eye-care company even if fails to top the competing $4.23 billion offer from Advanced Medical Optics Inc., analysts said.
“Warburg may only have to come within 10-15 percent of (Advanced Medical’s) offer,” Wachovia Capital Markets LLC analyst Larry Biegelsen said in a research report.
Advanced Medical’s offer is valued at $75 a share, of which $45 is in cash and $30 in stock. That offer compares with a $65 a share all-cash offer made by Warburg Pincus in May.
“Bausch’s financial advisor considered Warburg’s $65 offer fair from a financial point of view, and considering Warburg’s disciplined investment philosophy, we do not expect Warburg to increase its offer substantially,” Biegelsen said.
In addition to offering cash, Warburg also has the advantage of a faster closing to its deal, analysts said. Warburg won antitrust approval for its Bausch & Lomb bid on Tuesday, while Advanced Medical would likely face tough regulatory scrutiny since some of its businesses overlap with Bausch & Lomb.
“It’s money now versus cash and stock later. You’ll take slightly less to be able to pocket the money now,” said one trader who declined to be named.
Bausch & Lomb has said Advanced Medical’s proposal is reasonably likely to lead to a superior deal and it will continue negotiations with its new suitor. Still, Bausch & Lomb reaffirmed its support for the Warburg Pincus deal in a proxy filing on Tuesday.
It may be several days before either suitor makes its next move, sources familiar with the situation told Reuters. Stay tuned.
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Bausch & Lomb has one of the most incompetent management teams around and is ridiculously overpriced. Just two years ago B&L stock was topping 80 dollars a share and if it wern’t for a potential buyout shares would still be well below that. The CEO Ron Zarrella who Jim Cramer has placed on his wall of shame has ruined this once great company. You can see Cramer’s full analysis and recaps at http://www.friendbuddypals.com/. In my mind Zarrella’s greatest error has occurred during the disclosure of the accounting scandal in late 2005 when Bausch concluded that there was “material weakness in its controls over financial reporting,” and in early 2007 Bausch had to restate earnings for the first four years of Mr.Zarrella’s tenure. I don’t know what price any company with this type of management is worth but is certainly isn’t close to 70 dollars a
share or greater.
full disclosure: I regularly contribute to the http://www.friendbuddypals.com
- Posted by Robert Elpisblog