With an Eye on Growth, Valeant Buys Vision Health Company Bausch & Lomb for $8.7 Billion

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Reported by Annette Kreuger, Industrial Info Resources (Sugar Land, Texas)--Valeant Pharmaceuticals International Incorporated (NYSE:VRX) has agreed to purchase leading eye care company Bausch + Lomb Holdings Incorporated for $8.7 billion in cash. The deal, expected to close during the third quarter, will bring Canadian Valeant, with its current focus on dermatology products, Bausch & Lomb's lucrative array of eye care health products.

Earlier this month, Valeant announced that it expected revenues of between $4.4 billion and $4.8 billion in 2013, which is up 30% from 2012, excluding potential acquisitions. Bausch + Lomb has estimated a pro forma 2013 net revenue of more than $3.5 billion. With the purchase of Bausch + Lomb, Valeant is banking on capitalizing from the growing eye health care market, driven by an aging patient population, an increased rate of diabetes, and demand from emerging markets.

Currently, Bausch + Lomb has three business divisions: Pharmaceutical (including prescription brands, generics and over-the-counter), Vision Care (contact lenses and solutions) and Surgical (intraocular lenses and surgical equipment). The company's offerings include many well-known brands, such as Ocuvite eye drops and Biotrue ONEday contact lenses. Following the completion of the deal, Bausch + Lomb will become a division of Valeant. All of Valeant's existing ophthalmology businesses will be integrated into the Bausch + Lomb division, creating a global eye health platform.

Both companies' Board of Directors agreed unanimously on the $8.7 billion, which will pay out about $4.5 billion to an investor group led by Warburg Pincus. The remaining $4.2 billion will be used to repay Bausch + Lomb's outstanding debt. The transaction will be funded with debt financing from Goldman Sachs Bank USA and approximately $1.5 billion to $2 billion of new equity.

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