Having just spun off the drug development part of its business, could Abbott Laboratories ($ABT) really be considering a $10 billion deal to buy eye-care company Bausch + Lomb?
Sources tell Bloomberg that is the case. They also say Johnson & Johnson ($JNJ) and Sanofi ($SNY) are kicking the tires on the company, which private equity firm Warburg Pincus is looking to unload. Abbott and Johnson & Johnson are new names to be floated by sources, perhaps to keep interest warm for a deal. Last month The Wall Street Journal was reporting interest from Sanofi and Merck ($MRK). Of course no one from any of the companies has any for-the-record comment.
The $10 billion is what Warburg Pincus would like to get, not necessarily what it would sell for. That would pencil out to a 200% gain on its investment. It took Bausch + Lomb private in 2007 in a deal valued at $4.6 billion, including debt. The contact lens and eye drug company reportedly has seen its earnings grow to just under $700 million a year from about $400 million at the time.
Bausch + Lomb first brings to the mind's eye contact lenses and solutions, but it has developed its prescription drug business in recent years. That includes the $500 million acquisition of eye drug company ISTA, which it completed in June. The deal added ISTA's product pipeline to its own, as well as products such as Bromday, a drop for cataract surgery patients.
Sources says Warburg Pincus likes suitors such as Abbott that might be interested in the whole enchilada, as opposed to companies--Sanofi perhaps--that might be interested in picking up just pieces of Bausch + Lomb. There are tax benefits, and so more to be made, from selling it intact, sources say. Warburg Pincus earlier said it would spin the company off into a publicly traded business and is making sure everyone knows it can still go that route if potential bidders are not thinking in big enough numbers.
- read the Bloomberg story
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