Bausch & Lomb: Key Buyout Figures Team Up, Ready to Submit Attractive Offer

Continued progress on the buyout of Bausch & Lomb is lifting shares, with the stock up over 6% at the time of writing. Financial Times reported on Oct. 14 that two prominent figures involved in the potential deal teamed up to come up with a joint bid for the vision care company. TPG and Blackstone were mentioned in our previous notes as key interested buyers and look to be frontrunners for the deal. The reported bidding offer has an enterprise value of about $25 per share, or $13 billion-$14 billion in enterprise value. This is meaningfully above our fair value estimate of $19 per share, or $26 CAD, and we do not make any changes to our fundamental DCF-based valuation. We think this is a highly attractive valuation for Bausch Health, Bausch & Lomb’s parent company that still owns about 88% of its subsidiary and is dealing with leverage challenges. While the direction the deal will take going forward still remains uncertain, we think the buyout of Bausch & Lomb looks more likely now than when we published our last note on the matter (Sept. 17) given the healthy valuation.