Unlock the Editor’s Digest without cost
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.
Blackstone, Introduction Worldwide and TPG Capital are amongst an extended listing of personal fairness corporations learning bids for Bausch + Lomb, in accordance with individuals near the discussions, after the eyecare firm kicked off a sale course of to interrupt the deadlock over a spin-off from its indebted father or mother.
Bausch + Lomb was put up on the market after a deliberate separation from its father or mother firm Bausch Health, previously often called Valeant, unravelled amid tensions between activist buyers and collectors owed $21bn by the father or mother firm.
Personal fairness teams KKR, CVC Capital and Hellman & Friedman are additionally contemplating bids for the eyecare enterprise, forward of a delicate deadline later this week, in accordance with individuals conversant in the matter.
The corporations have held conferences with Bausch + Lomb’s administration crew — which is led by chief govt Brent Saunders, a well known dealmaker — in latest weeks, they added.
Potential bidders must specific curiosity in making a suggestion by Friday to remain within the course of, individuals conversant in the matter stated. There isn’t a assure that the sale course of will lead to a deal. Bausch Well being can also be exploring different choices, together with refinancing a few of its debt.
Bausch + Lomb, which is being suggested by Goldman Sachs, needs to enter into unique talks over a attainable sale by the top of October. A goal sale worth for the enterprise couldn’t be ascertained, however is prone to come at a premium to the present enterprise worth together with debt of $11.5bn.
TPG is especially excited by Bausch + Lomb because it might extract synergies with BVI Medical, an ophthalmology firm it already owns, one particular person stated.
Bausch + Lomb and Goldman Sachs in addition to Introduction, Blackstone, H&F, KKR and TPG declined to remark. Bausch Well being and CVC didn’t instantly reply to a request for remark.
After asserting a spin-off 4 years in the past, Bausch + Lomb was listed as a separate firm in 2022 however Bausch Well being retained an 88 per cent shareholding. Due to issues from lenders over the well being of Bausch Well being’s steadiness sheet, the unique plan to strike a take care of buyers to alternate Bausch Well being inventory for Bausch + Lomb got here undone.
Bausch Well being collectors, together with Apollo Administration, Elliott Administration, GoldenTree Asset Administration and Silver Level Capital, opposed a spin-off over issues that it might depart the father or mother firm bancrupt, as it will lose its extra worthwhile subsidiary simply forward of roughly $10bn value of maturities coming due earlier than the top of 2027.
In distinction, Bausch Well being’s high shareholders, activist investor Carl Icahn and John Paulson’s fund Paulson & Co, who’ve board illustration at each the father or mother firm and its subsidiary, had supported the completion of a spin-off as it will give them a big shareholding within the extra worthwhile eye care enterprise. A sale, nonetheless, might fulfill each events, as it will realise a sizeable return for shareholders and provides Bausch Well being money to pay its money owed.
Bausch + Lomb is projected to generate practically $860mn in adjusted earnings earlier than curiosity, taxation, depreciation and amortisation from $4.7bn in revenues this 12 months, practically three-fifths of which comes from gross sales of contact lenses and dry eye medicine Xiidra and Miebo. The corporate additionally sells surgical gear to ophthalmologists.
For the reason that Monetary Occasions reported over the weekend that Bausch + Lomb was working with advisers to check curiosity from non-public fairness consumers, its share worth has elevated 19 per cent, valuing its fairness at $6.5bn as of Tuesday’s market shut.
David Saxon, a Needham analyst, stated in a notice earlier this week that he believed non-public fairness was “the probably purchaser”. However he added that “it’s unsure a [Bausch + Lomb] sale would alleviate buyers’ issues round [Bausch Health’s] solvency and might be challenged by [Bausch Health’s] collectors.”
Bausch Well being faces additional uncertainty as its lead drug — Xifaxan, a gastrointestinal medicine — is ready to return off patent by 2029. Bausch Well being’s market worth has risen by 13 per cent to $2.6bn this week, however stays beneath its worth earlier than the corporate confronted authorized challenges over its Xifaxan patents.
