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Seeing eye to eye
by Kelsey Kaustinen  |  Email the author


MADISON, N.J.Bausch + Lomb and ISTA Pharmaceuticals, Inc. have announced the signing of a definitive agreement under which Bausch + Lomb will acquire ISTA for $9.10 per share in cash, for a total of approximately $500 million. both companies' boards of directors approved the transaction.  
The price tag represents a 10 percent premium over ISTA's last share price when the market closed on March 23. What seemed to seal the deal for ISTA was that it also represents a 40 percent premium over the proposal ISTA received from Valeant Pharmaceuticals. ISTA first announced that it had received an unsolicited, non-binding proposal from Valeant on Dec. 16, 2011, in which Valeant proposed the acquisition all of ISTA's outstanding shares for $6.50 per share, subject to due diligence. After reviewing the offer, ISTA's board of directors rejected it as being "grossly inadequate" and announced that it would be conducting a strategic review to determine the best options for the company. Anido and Richard C. Williams, chairman at ISTA, met with Valeant's chairman and CEO on Jan. 11 to discuss Valeant's offer, and on Jan. 17, ISTA announced that Valeant had revised its proposal to $7.50 per share, though Bausch + Lomb's offer obviously emerged as the most attractive.  
"ISTA is an excellent strategic fit with Bausch + Lomb's rapidly growing pharmaceutical business, and this combination represents an important step in Bausch + Lomb's commitment to becoming the best global eye health company. Because Bausch + Lomb already manufactures nearly all of ISTA's current U.S. products, our companies have known each other well for many years," Brent Saunders, president and CEO of Bausch + Lomb, said in a press release. "We share a strong overlapping customer base in the U.S., a commitment to serving our physicians and patients and a track record of developing meaningful medical advances in eye health. With this combination, we will significantly enhance our pharmaceutical pipeline, nearly doubling the number of mid- to late-stage innovations. We look forward to delivering the benefits of this combination to customers, patients, employees and partners of both companies."  
ISTA brings with it a product portfolio of non- steroidal, anti-inflammatory, allergy, glaucoma and spreading agents. The company also has several drug candidates in development in its pipeline, including two for allergic rhinitis, both in Phase II development; one for ocular inflammation/infection in Phase III development; and one for age- related macular degeneration approaching Phase II. All indications are looking at market sizes of at least $150 million by the year 2015, according to ISTA's estimates.
"Along with the rest of our Board of Directors, I am pleased that the tremendous assets ISTA's people have created with our products and pipeline have been recognized by Bausch + Lomb, a global leader in eye health, and that we were able to finalize a transaction after a thorough process that delivers shareholders an important return on their investment in ISTA," Vicente Anido, Jr., Ph.D., president and CEO of ISTA, said in a press release. "Both companies have a significant commitment to serving the needs of the healthcare industry, eye care professionals and patients alike. ISTA's portfolio of prescription eye and allergy products is a natural extension of Bausch + Lomb's pharmaceutical business focus. Together, we create an impressive platform to commercialize new eye care and allergy products already under development."
The transaction is expected to close in the second quarter of this year, subject to customary closing conditions, regulatory approval and approval from ISTA's shareholders. Bausch + Lomb expects it to be accretive to its EBITDA in the first year after close.  
Bausch + Lomb brought on Goldman, Sachs & Co. as financial advisor for the transaction and Cleary Gottlieb Steen & Hamilton LLP as legal counsel. ISTA brought on Greenhill & Co. as its financial advisor and Stradling Yocca Carlson & Rauth and WilmerHale LLP as its legal counsel.
Code: E03271201



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