Keep knowledgeable with free updates
Merely signal as much as the Non-public fairness myFT Digest — delivered on to your inbox.
Blackstone has cooled on participating in a joint takeover bid for eyecare firm Bausch + Lomb, jeopardising one of many largest leveraged buyouts in healthcare this yr, in keeping with individuals acquainted with talks.
The personal fairness group in October teamed up with investor TPG to discover a bid for Bausch + Lomb. However Blackstone had subsequently balked on the frothy worth expectations of the vendor, the individuals mentioned.
An public sale course of for Bausch + Lomb, which sells contacts lenses, dry eye medication and surgical ophthalmology tools, started earlier this yr as its closely indebted father or mother firm Bausch Well being appeared to pay down debt.
Two individuals near the talks mentioned Blackstone would in all probability drop out of the consortium, decreasing the chances of a deal. Talks had been ongoing and a deal might nonetheless be clinched if Bausch + Lomb was prepared to just accept a cheaper price or if TPG discovered one other personal fairness group to behave as associate on the deal, the individuals added.
Negotiations between Bausch + Lomb and the consortium had been held as lately as the top of final week. Shares in Bausch + Lomb stood at simply over $20 at Tuesday’s shut, giving it an enterprise worth together with debt of greater than $11bn. Bausch + Lomb’s share worth had jumped 30 per cent since the Financial Times first reported in September that it had employed Goldman Sachs to run a gross sales course of. Nevertheless, the inventory fell greater than 9 per cent in after-hours buying and selling following the FT’s report on Blackstone’s reluctance to affix the bid.
Bausch + Lomb’s board — which incorporates hedge fund titan John Paulson and a consultant of activist investor Carl Icahn, who’re each main Bausch Well being shareholders — had been hoping for a proposal at a sizeable premium to $20 a share to get a deal over the road, however the consortium of TPG and Blackstone pushed again at providing such a excessive worth.
The corporate is run by chief govt Brent Saunders, a widely known dealmaker who pushed the $63bn sale of botox maker Allergan to pharma group AbbVie, and is an in depth ally of Icahn.
TPG already owns an eyecare enterprise — BVI Medical — and questions arose in due diligence about the way it may very well be efficiently mixed with Bausch + Lomb.
Some 88 per cent of Bausch + Lomb is owned by Bausch Well being, which has been battling a $21bn debt pile and a languishing share worth left over from when it was beforehand often known as Valeant. Valeant got here underneath strain from traders for accounting irregularities and a expensive acquisition spree.
Bausch Well being has been making an attempt to spin off Bausch + Lomb as a listed firm however the course of faltered as Bausch Well being collectors, together with Apollo International Administration, Elliott Administration and GoldenTree Asset Administration, fretted over the impression it could have on the father or mother firm’s steadiness sheet.
Blackstone, TPG and Bausch + Lomb declined to remark.
Bausch + Lomb has posted 4 quarters of about 20 per cent year-on-year gross sales development, and its administration is assured it may proceed to thrive even when a deal falls aside, two individuals mentioned. The eyecare firm is projected by analysts to generate $872mn in earnings earlier than curiosity, taxes, depreciation and amortisation this yr on $4.7bn in revenues.
Bausch Well being, in the meantime, is going through considerations about $10bn in debt that’s set to come back due earlier than the top of 2027 — with the very best precedence being a $2.4bn fixed-rate mortgage due subsequent yr.
