Private equity firm completes $3.7B buyout of eye products maker Bausch & Lomb

10/26/2007 -  Private equity firm Warburg Pincus said Friday it has completed its $3.67 billion (€2.55 billion) buyout of troubled eye care products maker Bausch & Lomb Inc.

"We look forward to helping the company build upon its rich heritage and premier brand in ophthalmology," said Elizabeth Weatherman, a managing director at Warburg Pincus, a buyout and venture capital firm in New York.

Bausch & Lomb's board agreed to a $65-a-share buyout in May, prompting an unsolicited counter bid by rival Advanced Medical Optics Inc. But Santa Ana, California-based Advanced Medical withdrew its $4.2 billion (€2.9 billion) cash-and-stock offer in August, saying Bausch & Lomb had put up unrealistic hurdles to a potential deal.

In September, shareholders representing more than two-thirds of Bausch & Lomb stock voted in favor of the takeover. Warburg Pincus also assumed about $830 million (€577 million) of debt.

"With a strong and supportive partner in Warburg Pincus, we are well-positioned to create new opportunities for Bausch & Lomb and advance our leadership in the eye health industry," Bausch & Lomb's chief executive, Ronald Zarrella, said in a statement.

Zarrella told reporters last month that the deal allows Bausch & Lomb "to pursue the growth path we were on ... without a lot of outside distraction." Warburg Pincus' owners, he added, "think we can make a comeback from the difficulties of last year."

Bausch & Lomb stock ceases trading on the New York Stock Exchange at market close Friday and will be delisted. Its stock, which has bounced between $47.36 to $77 over the last year, edged up a penny to $64.99 in midday trading.

The 154-year-old company, which makes contact lenses, ophthalmic drugs and vision-correction surgical instruments, was rocked in May 2006 by the worldwide recall of a lens solution blamed for a flurry of potentially blinding fungal infections. In a regulatory filing Monday, the company said it has been named as a defendant in more than 550 product-liability lawsuits stemming from the recall.

Federal regulators called the $100 million (€69.5 million) -a-year ReNu with MoistureLoc multipurpose cleaner the "potential root cause" of an outbreak of Fusarium keratitis infections in the United States, Asia and other parts of the world.

Zarrella, who took the helm at Bausch & Lomb in 2001, holds options for 1.1 million shares. With the buyout, he earns $29.2 million (€20.3 million) and is entitled to an extra $10.1 million (€7 million) payout if his job is terminated "without cause," regulatory filings show.

The company, which employs 13,000 and posted $2.3 billion (€1.6 billion) in sales last year, has been publicly traded for 69 years and could return to public ownership within the next five to seven years, Zarrella said.