Valueact Chief "Sceptical" On Bausch & Lomb Deal
ValueAct Capital, one of the largest shareholders in Advanced Medical Optics, on Thursday sought to defend its apparent u-turn over the merits of the company's $5bn bid for rival eye-care group Bausch & Lomb, saying it was always "sceptical" about a deal.
This week, ValueAct unexpectedly dealt a blow to AMO's efforts to break up an agreed deal for Bausch & Lomb to be bought by Warburg Pincus, the US private equity firm, when it said it opposed the transaction.
The opposition of the San Francisco-based investment firm caught many investors by surprise because ValueAct had been in serious talks with Advanced Medical about potentially injecting as much as $700m of equity into the deal.
But in an interview with the Financial Times on Thursday, Jeffrey Ubben, managing partner of ValueAct, said: "We were sceptical but we were happy to go do some work and that's as far as it went. How they can say we offered money is beyond me."
Mr Ubben, a former manager of the Fidelity Value Fund, also said he did not think other Advanced Medical shareholders would support the Bausch & Lomb bid. "It's not going to fly," he said.
ValueAct has criticised AMO's bid for Bausch & Lomb, which was tabled last week, for been too risky. Mr Ubben's firm, which is also a big shareholder in Reuters and is supporting the merger with Canada's Thomson, has said Advanced Medical should instead focus on integrating other acquisitions and improving its existing contact lens solutions business.
AMO declined to comment on Mr Ubben's remarks, citing a "non-disclosure agreement with Bausch & Lomb that prohibits [it] from commenting beyond the letter filed".
But people close to the California-based eyecare group said ValueAct had met and discussed teaming up to bid for Bausch & Lomb on three occasions: May 24, June 12, and July 5. They added that they expected most Advanced Medical shareholders to have an open mind about the offer, which could lead to significant cost-savings and would allow AMO to offer more products to its customers.
Bausch & Lomb shares were down 1.3 per cent to $67.92, as investors' hopes for a bidding war receded. Warburg is offering $65 per share in cash, while AMO is offering a mix of cash and stock worth $75 per share.
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07-03-2008, 11:53 AM
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