TPG & Blackstone Team Up for $11.5 Bn Bid on Bausch + Lomb

Sources indicate that both TPG and Blackstone had shown interest in Bausch + Lomb before it went public in 2022.

Private equity giants TPG and Blackstone have submitted a joint bid to acquire eyecare company Bausch + Lomb in a deal that could be one of the largest private equity transactions of the year.

According to sources cited by the Financial Times, Bausch + Lomb’s enterprise value, including debt, stood at $11.5 billion as of Friday’s market close.

The sale has been initiated to resolve ongoing disputes related to Bausch + Lomb’s separation from its highly indebted parent company, Bausch Health.

Bausch + Lomb’s Potential Sale

The joint bid from TPG and Blackstone comes after several other private equity firms exited the bidding process. If successful, the acquisition would see Bausch + Lomb being taken private by these investment giants.

Sources indicate that both TPG and Blackstone had shown interest in Bausch + Lomb before it went public in 2022. TPG, in particular, already owns the ophthalmology firm BVI Medical, giving the firm significant experience in the eyecare industry.

Bids for Bausch + Lomb are expected to value the company between $13 billion and $14 billion, or up to $25 per share.

Managing the Sale Process

Goldman Sachs is overseeing the sale process as part of an effort to address tensions between Bausch Health’s shareholders and creditors.

Bausch Health, which currently holds an 88% stake in Bausch + Lomb, has been under pressure due to its massive debt load of $21 billion.

Concerns about the separation of Bausch + Lomb have stalled the spin-off, as creditors fear losing the more profitable subsidiary could push Bausch Health into insolvency.

Several major lenders, including Apollo Management, Elliott Management, GoldenTree Asset Management, and Silver Point Capital, have opposed the spin-off, citing the financial risks associated with Bausch Health’s heavy debt burden.

Financial Outlook

Bausch + Lomb is projected to generate nearly $860 million in adjusted EBITDA on $4.7 billion in revenue this year.

The company derives around 60% of its revenue from contact lenses and eye care drugs, including Xiidra and Miebo. Bausch + Lomb is also a key supplier of ophthalmic surgical equipment.

Since reports of a potential sale surfaced last month, shares in Bausch + Lomb have surged 25% to $19.47. Bonds of Bausch Health have also gained in value, as a sale could help the parent company reduce its massive debt load.

Bausch Health, formerly known as Valeant, faces $10 billion in debt maturities before 2027, with a pressing $2.4 billion fixed-rate loan due next year.

Challenges for Bausch Health

Bausch Health’s financial outlook has been clouded by its lead drug, Xifaxan, a gastrointestinal treatment, losing patent protection in 2029.

While the company’s market value has risen 26% to nearly $2.9 billion since the sale process began, it remains significantly below its valuation prior to legal challenges over Xifaxan’s patents.

It remains unclear how Bausch Health’s key shareholders, including Carl Icahn and John Paulson, plan to allocate the proceeds from a potential sale.

Discussions are underway about paying a special dividend to shareholders after addressing near-term debt obligations, though this move may upset creditors.

Formal bids are expected by the end of the month, but sources have noted there is no certainty a deal will be finalized.

Representatives for Blackstone, TPG, and Bausch + Lomb have declined to comment on the matter, while Goldman Sachs has not provided an immediate response.

With several moving parts, including Bausch Health’s debt challenges and creditor concerns, the future of the deal remains uncertain.

Bausch + Lomb’s sale could provide much-needed financial relief to its parent company while offering significant growth opportunities for TPG and Blackstone in the competitive eyecare market.

Stay tuned for more such updates on Digital Health News.