U.S. News

Advanced Medical Optics Holder Opposes Bausch & Lomb Bid

A major shareholder of Advanced Medical Optics plans to vote against the medical device maker's proposed acquisition of Bausch & Lomb, according to a regulatory filing.

Advanced Medical Optics made a $4.23 billion bid for Bausch & Lomb on July 6, topping a $3.67 billion offer from private equity firm Warburg Pincus. Bausch & Lomb, which had previously accepted Warburg's offer, is currently weighing Advanced Medical Optics' rival bid.

The shareholder, private equity firm ValueAct Capital, owns 8.8 million shares, representing a 14.7 percent stake in the Santa Ana, Calif.-based company, according to the Securities and Exchange Commission filing.

In a letter to Advanced Medical Optics Chairman, President and Chief Executive James V. Mazzo dated Tuesday, ValueAct Capital said the deal would reduce their returns and expose the company to "unacceptable risk."

The shareholder said it doubts the company's ability to integrate Bausch & Lomb. Citing the company's history of shifting investor guidance, ValueAct Capital said the acquisition "is simply too big a leap of faith in light of your public track record."

The shareholder also said the consumer contact lens and lens care business is 'clearly prone to product recalls' and the deal also raises "substantial regulatory risk."

In a letter released in a separate regulatory filing on Wednesday, Mazzo defended the proposed takeover and noted that ValueAct Capital had recently expressed interest in financing the deal.

"We have every confidence that we have the experience and bandwidth to successfully complete the transaction and integrate the two businesses to create a stronger, more competitive combined company with a platform for sustained, profitable growth," Mazzo wrote.

Mazzo also said shareholders had exaggerated the regulatory risks involved in the deal, and mischaracterized the company's earnings and guidance updates.