Advanced Medical Optics to amend proposal for Bausch & Lomb to show proof of shareholder support

By Lisa Kerner

Charlotte, N.C., July 27 - Advanced Medical Optics, Inc., in a letter to Bausch & Lomb Inc.'s special committee, said it believes its $75-per-share offer for the company is "financially and strategically" superior to the $65 per share offered in Bausch & Lomb's agreement with Warburg Pincus LLC.

The letter was included as part of an 8-K filing with the Securities and Exchange Commission.

However, Advanced Medical agreed to replace the up to $35 million expense reimbursement provision in its proposals with a $50 million reverse termination fee that would be payable to Advanced Medical Optics if its shareholders vote down the deal.

Advanced Medical Optics also offered two alternatives that would include the revised termination fee.

The first alternative would have Advanced Medical Optics provide Bausch & Lomb with proof of its shareholders' support prior to mailing of proxy statements for the Warburg merger. A limited waiver from the Warburg agreement would be needed in addition to more information from Bausch & Lomb.

Instead of discussions with its shareholders, the second alternative would have Advanced Medical Optics and Bausch & Lomb enter into a merger agreement, hold a vote of Advanced Medical Optics' shareholders and postpone the Bausch & Lomb shareholder vote on the Warburg merger. Warburg could end up receiving the break-up fee.

The second alternative would require Bausch & Lomb to amend the Warburg merger.

"We are sure you will agree that providing your shareholders with the opportunity to avail themselves of a choice in this context is in their best interests. As part of entering into the Advanced Medical Optics merger agreement, we would agree to reimburse Bausch & Lomb's expenses up to $10 million," the letter stated.

On July 24, Bausch & Lomb notified Advanced Medical Optics that unless revised, its proposal is not likely to be considered superior to the company's agreement with affiliates of Warburg Pincus. The special committee said it was not convinced that Advanced Medical Optics had enough shareholder support to consummate its proposed merger.

Advanced Medical Optics is a Santa Ana, Calif.-based provider of ophthalmic surgical devices and eye care products. Based in Rochester, N.Y., Bausch & Lomb is an eye health company.

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