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Private equity groups TPG and Blackstone have teamed up to work on a joint bid for eyecare company Bausch + Lomb, according to people familiar with the matter.
If it goes through, the deal could be one of the largest private equity buyouts of the year, with Bausch + Lomb’s enterprise value including debt totalling $11.5bn as of market close on Friday. Several other private equity funds assessing bids have dropped out of the process.
Bausch + Lomb was put up for sale to resolve an impasse over a separation from its heavily indebted parent company.
TPG and Blackstone have long been considered the front-runners to take the business private, as before Bausch + Lomb publicly listed in 2022 the private equity groups had expressed interest in buying the business, the people added. TPG already owns ophthalmology company BVI Medical.
People familiar with the bidding said offers are expected to value the company at an enterprise value of between $13bn and $14bn, or up to $25 per share. Bausch + Lomb closed Friday trading at $19.47.
A sale process was kicked off for Bausch + Lomb, led by advisers at Goldman Sachs, in an attempt to resolve a feud between shareholders and creditors of its parent company Bausch Health, which owns 88 per cent of Bausch + Lomb. Bausch + Lomb’s chief executive is famed dealmaker Brent Saunders, who sold Allergan to AbbVie for $63bn.
Formal bids are expected by as early as the end of the month. However, it is still possible a deal may not occur, the people said.
Blackstone, TPG and Bausch + Lomb declined to comment. Goldman did not immediately respond.
A spin-off process ground to a halt as losing its more profitable subsidiary threatened to leave Bausch Health insolvent because of a $21bn debt pile, and was opposed by lenders, including Apollo Management, Elliott Management, GoldenTree Asset Management and Silver Point Capital.
Shares in Bausch + Lomb are up 25 per cent to $19.47 since the Financial Times reported last month that the eyecare company was up for sale. Bonds in Bausch Health have also traded strongly as a sale would allow the company, formerly known as Valeant, to pay down its debts.
Bausch Health has about $10bn worth of maturities coming due before the end of 2027 — with the highest priority being a $2.4bn fixed-rate loan due next year. How Bausch Health’s key shareholders — including Wall Street titans Carl Icahn and John Paulson — would spend the proceeds of the sale is unclear. But one idea under discussion is to pay themselves a special dividend after paying down the near-term debt, according to two people. But this move would likely rankle creditors.
Representatives for Icahn declined to comment, while Paulson & Co did not immediately respond to a request for comment.
Bausch + Lomb is projected to generate nearly $860mn in adjusted earnings before interest, taxation, depreciation and amortisation from $4.7bn in revenues this year, nearly three-fifths of which comes from sales of contact lenses and dry eye drugs Xiidra and Miebo. The company also sells surgical equipment to ophthalmologists.
Doubts over Bausch Health’s performance and solvency have been added to by its lead drug — Xifaxan, a gastrointestinal medication — coming off patent by 2029. Bausch Health’s market value has risen by nearly 26 per cent to just under $2.9bn after the sale process was first reported, but remains well below its value before the company faced legal challenges over its Xifaxan patents.