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Blackstone has cooled on collaborating in a joint takeover bid for eyecare firm Bausch + Lomb, jeopardising one of many greatest leveraged buyouts in healthcare this yr, in keeping with folks conversant in talks.
The personal fairness group in October teamed up with investor TPG to discover a bid for Bausch + Lomb. However Blackstone had subsequently balked on the frothy value expectations of the vendor, the folks mentioned.
An public sale course of for Bausch + Lomb, which sells contact lenses, dry eye medicine and surgical ophthalmology gear, started earlier this yr as its closely indebted mother or father firm Bausch Well being appeared to pay down debt.
Two folks near the talks mentioned Blackstone would in all probability drop out of the consortium, lowering the chances of a deal. Talks have been ongoing and a deal may nonetheless be clinched if Bausch + Lomb was prepared to simply accept a cheaper price or if TPG discovered one other personal fairness group to behave as associate on the deal, the folks added.
Negotiations between Bausch + Lomb and the consortium have been held as not too long ago as the top of final week. Shares in Bausch + Lomb stood at simply over $20 at Tuesday’s shut, giving it an enterprise worth together with debt of greater than $11bn. Bausch + Lomb’s share value had jumped 30 per cent since the Financial Times first reported in September that it had employed Goldman Sachs to run a gross sales course of. Nonetheless, the inventory fell greater than 9 per cent in after-hours buying and selling following the FT’s report on Blackstone’s reluctance to hitch the bid.
Bausch + Lomb’s board — which incorporates hedge fund titan John Paulson and a consultant of activist investor Carl Icahn, who’re each main Bausch Well being shareholders — had been hoping for a proposal at a sizeable premium to $20 a share to get a deal over the road, however the consortium of TPG and Blackstone pushed again at providing such a excessive value.
The corporate is run by chief govt Brent Saunders, a well known dealmaker who pushed the $63bn sale of botox maker Allergan to pharma group AbbVie, and is a detailed ally of Icahn.
TPG already owns an eyecare enterprise — BVI Medical — and questions arose in due diligence about the way it could possibly be efficiently mixed with Bausch + Lomb.
Some 88 per cent of Bausch + Lomb is owned by Bausch Well being, which has been combating a $21bn debt pile and a languishing share value left over from when it was beforehand often known as Valeant. Valeant got here underneath strain from buyers for accounting irregularities and a pricey acquisition spree.
Bausch Well being has been making an attempt to spin off Bausch + Lomb as a listed firm however the course of faltered as Bausch Well being collectors, together with Apollo International Administration, Elliott Administration and GoldenTree Asset Administration, fretted over the affect it could have on the mother or father firm’s stability sheet.
Blackstone, TPG and Bausch + Lomb declined to remark.
Bausch + Lomb has posted 4 quarters of about 20 per cent year-on-year gross sales development, and its administration is assured it may possibly proceed to thrive even when a deal falls aside, two folks mentioned. The eyecare firm is projected by analysts to generate $872mn in earnings earlier than curiosity, taxes, depreciation and amortisation this yr on $4.7bn in revenues.
Bausch Well being, in the meantime, is going through issues about $10bn in debt that’s set to return due earlier than the top of 2027 — with the very best precedence being a $2.4bn fixed-rate mortgage due subsequent yr.
