Bausch & Lombsaid Monday it was giving Advanced Medical Optics limited permission to discuss its $4.2 billion bid with key shareholders, although the eye care products maker was sticking with its $3.67 billion buyout deal with a private equity firm.
In a regulatory filing, Bausch & Lomb again expressed "substantial uncertainty" that its Santa Ana, Calif.-based competitor could win shareholder approval for its cash-and-stock counter bid. Advanced Medical's third-largest shareholder, ValueAct Capital, has opposed the takeover move.
In mid-May, buyout and venture capital firm Warburg Pincus and Bausch & Lomb's board agreed on a $65 a share all-cash deal for the 154-year-old maker of contact lenses, ophthalmic drugs and vision-correction surgical instruments.
On July 5, the final day of a 50-day period set aside for other buyers to make a better bid, Advanced Medical put in a $75-a-share offer of $45 in cash and $30 in AMO stock for each Bausch & Lomb share.
Bausch & Lomb "continues to recommend the pending merger" with New York-based Warburg Pincus, its board said in a letter dated Sunday to Advanced Medical's chief executive, James Mazzo.
But it agreed to relax a confidentiality agreement to allow Advanced Medical to discuss publicly available aspects of its offer with some of its largest shareholders, including the deal's potential boost to earnings. Advanced Medical has already said a deal would bring an estimated $180 million in annual cost savings.
"The limited waiver does not permit AMO to provide any non-public information concerning Bausch & Lomb," the board said. It gave Advanced Medical until noon Friday to provide "concrete, credible evidence" of its ability to secure approval from its stockholders.
Advanced Medical makes artificial lenses and other medical devices for the eye. In the lens solution market, it is a No. 3 player behind Alcon Inc. and Bausch & Lomb.
Bausch & Lomb posted $2.3 billion in sales last year and employs about 13,000 employees, while Advanced Medical recorded $998 million in sales in 2006 and had 3,300 employees.
Shares of Bausch & Lomb fell 37 cents to $64.23 in morning trading on the New York Stock Exchange, while shares of Advanced Medical Optics eased 6 cents to $31.22.