Is Valeant Looking To Sell B&L's Eye Surgery Business For $2.5B?
Valeant may be looking to offset debt by divesting Bausch & Lomb’s (B&L) eye surgical equipment in a deal worth an estimated $2.5 billion. Sources close to the company told Wall Street Journal (WSJ) that the sale process was in an “early stage” and did not name any potential buyers.
B&L entered the laser eye surgery market in 2000 with the FDA approval of an excimer laser and recently secured clearance for Victus femtosecond laser platform for lens fragmentation during cataract surgery. In 2015, Valeant made a $166 deal to acquire Synergetics to boost B&L’s presence in the vitreoretinal surgery market.
Valeant’s acquisition of B&L — which was completed in 2013 for $8.7 billion — was one of 15 publicly announced deals launched shortly after the Valeant’s creation in 2010. It was CEO Mike Pearson’s aggressive strategy to combine both large mergers and bolt-on deals to grow Valeant’s portfolio, principally in dermatology and eye care.
According to WSJ , that strategy has not played out as expected, and now new Valeant CEO Joseph Papa is looking at divestments as a strategy to offset $30 billion in debt. In March, billionaire activist and Valeant board member Bill Ackman proposed selling part of B&L to pay down debt, and speculated that B&L could be a successful standalone company someday, reported Bloomberg.
Ackman told CNBC in April that the company was only looking to divest “non-core” businesses, and confirmed to Fortune that he considered B&L to be a “core asset” for Valeant. An analyst from Wells Fargo warned that a sale of B&L and other huge divestitures currently rumored to be under consideration could be “selling the stove to save the restaurant,” reported Business Insider.
“While Valeant management evaluates strategic alternatives for all opportunities related to core and non-core business units in the best interest of our shareholders and stakeholders,” a Valeant spokesperson told WSJ. “The Bausch & Lomb franchise and its dedicated team are a critical part of our business.”
The news of a potential B&L deal comes days after news that the company was in talks with Japanese drug company Takeda for the possible sale of Salix, a Valeant subsidiary with a portfolio of GI drugs acquired last year for $11 billion. Sources close to matter told WSJ that Valeant may still decide to hold on to B&L’s surgical business, but a Valeant spokesperson told the newspaper that the company was in talks with “third parties for various divestitures including but not limited to Salix.”