The attempt by California-based Advanced Medical Optics Inc. to purchase Bausch & Lomb – an American eye care company which is one of its main business rivals – is now under question. BVI-registered ValueAct Capital, which is a major shareholder of Advanced Medical, opposed company’s plan to buy out B&L. The owners of the BVI company evaluated the deal as “posing unacceptable riskâ€, and advised Advanced Medical to let another firm buy B&L.
Advanced Medical was competing with private equity firm Warburg Pincus LLC to purchase Bausch & Lomb. Advanced Medical offered $75 per share, while Warburg offer was for $65.
General objections to the proposal were named by the partners of the BVI-registered ValueAct Capital, and include the consideration about putting too much of Advanced Medical’s business in the consumer contact lens and lens care field, which is more risky and more likely to fluctuate than Advanced Medical’s surgical business. Other question of importance is whether Advanced Medical could successfully absorb a company twice its size.
ValueAct Capital’s partners Jeffrey W. Ubben and G. Mason Morfit also devoted much criticism to what they named the lack of adequate growth in Advanced Medical’s stock price and earnings per share.
ValueAct Capital, based in the BVI and operating out of San Francisco, owns 8.8 million shares of Advanced Medical, or 14.7% of the company. The experts have stated that the opinion of such a large shareholder will have significant weight with Advanced Medical, however, there is no guarantee that the company will be stopped in its intentions. The company will probably try to team up with private equity firms so it can offer all cash to B&L shareholders, instead of a mix of cash and its own stock. Buying B&L with cash alone would not require shareholder approval.
It should be said that ValueAct Capital (BVI ) is already known for aggressively and publicly criticizing the way how business is conducted in the companies it partially owns.