TPG, Blackstone bid for Bausch + Lomb in potential $14 billion deal

New Delhi:

Private equity giants TPG and Blackstone have joined forces to submit a joint bid for eyecare company Bausch + Lomb, Financial Times reported citing sources familiar with the development. If successful, the transaction could be one of the largest private equity deals of the year, with Bausch + Lomb's enterprise value, including debt, standing at $11.5 billion as of Friday's market close. Several other private equity firms that had been evaluating bids have reportedly exited the process, FT reported.

Bausch + Lomb has been put up for sale to resolve ongoing disputes over its separation from its highly indebted parent company, Bausch Health.

TPG and Blackstone have emerged as leading contenders to take Bausch + Lomb private. Both firms had shown interest in acquiring the business even before it went public in 2022, the sources said. Notably, TPG already owns ophthalmology firm BVI Medical.

According to those familiar with the bidding, offers are likely to value Bausch + Lomb at an enterprise value between $13 billion and $14 billion, translating to up to $25 per share. The company closed Friday trading at $19.47 per share.

Goldman Sachs is managing the sale process in a bid to resolve tensions between Bausch Health’s shareholders and creditors. Bausch Health currently holds an 88 per cent stake in Bausch + Lomb. The company’s CEO, Brent Saunders, a well-known dealmaker, previously orchestrated the $63 billion sale of Allergan to AbbVie.

Formal bids are expected by the end of the month, though sources indicated that there is no certainty that a deal will be finalized.

Representatives for Blackstone, TPG, and Bausch + Lomb declined to comment on the matter, and Goldman Sachs did not provide an immediate response.

The spin-off of Bausch + Lomb has been stalled due to concerns that losing its more profitable subsidiary could leave Bausch Health insolvent, given its $21 billion debt load. Major lenders, including Apollo Management, Elliott Management, GoldenTree Asset Management, and Silver Point Capital, have opposed the spin-off.

Shares in Bausch + Lomb have surged 25 per cent to $19.47 since reports last month indicated that the company was up for sale. Bonds of Bausch Health have also gained, as a sale would help the company, formerly known as Valeant, reduce its debts.

Bausch Health faces $10 billion in debt maturities before 2027, with a $2.4 billion fixed-rate loan due next year being the most pressing. It remains unclear how the company’s key shareholders, including Wall Street titans Carl Icahn and John Paulson, plan to allocate the proceeds of a potential sale. However, discussions are underway about paying a special dividend to shareholders after settling the near-term debt, though this move may upset creditors.

Representatives for Icahn and Paulson & Co did not immediately respond to requests for comment.

Bausch + Lomb is projected to generate nearly $860 million in adjusted EBITDA on $4.7 billion in revenue this year, with approximately 60% of its revenue coming from contact lenses and eye care drugs like Xiidra and Miebo. The company also supplies ophthalmic surgical equipment.

Bausch Health’s outlook has been further clouded by its lead drug, Xifaxan, a gastrointestinal treatment, losing patent protection in 2029. While the company’s market value has risen by 26% to just under $2.9 billion since the sale process began, it remains well below its valuation prior to legal challenges over the Xifaxan patents.

(With inputs from Financial Times)