Bausch & Lomb OKs discussions with Advanced Medical Optics, still firm on Warburg Pincus deal

By Lisa Kerner

Charlotte, N.C., July 30 - Bausch & Lomb Inc. responded to Advanced Medical Optics, Inc.'s July 27 proposal to amend its offer for the company, agreeing to facilitate discussions among the two companies and their shareholders. However, Bausch & Lomb continues to recommend the pending merger of the company with affiliates of Warburg Pincus LLC, a form 8-K filing with the Securities and Exchange Commission stated.

While Advanced Medical Optics 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, it agreed to replace the up to $35 million expense reimbursement provision in its proposals with a $50 million reverse termination fee.

As previously reported, the $50 million fee would be payable to Advanced Medical Optics if its shareholders vote down the deal.

Advanced Medical Optics also offered to provide Bausch & Lomb with proof of its shareholders' support, including a vote by Advanced Medical Optics' shareholders.

ValueAct Capital, with a 14.7% stake in Bausch & Lomb, said it will vote its 8.8 million shares against the Advanced Medical Optics proposal. As a result, Bausch & Lomb's special committee is prepared to have its representatives meet with Advanced Medical Optics stockholders and representatives to get information on projected standalone and pro forma financial information.

Stockholders could use the information in evaluating the transaction contemplated by the Advanced Medical Optics proposal, according to a letter from special committee chairman William H. Waltrip to Advanced Medical Optics head James V. Mazzo.

Bausch & Lomb requested "concrete, credible evidence" of Advanced Medical Optics' ability to secure stockholder approval no later than noon ET on Aug. 3, according to the letter.

In addition, Bausch & Lomb said it does not believe the proposed $50 million reverse termination fee is adequate and Warburg Pincus will not agree to amend its merger agreement.

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. At that time, 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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