Bausch agrees to be sold to equity firm

Bausch & Lomb Inc., still dealing with widespread eye care product recalls that have hurt its sales and delayed its financial reports, said Wednesday that it agreed to be acquired by global private equity firm Warburg Pincus for about $3.67 billion.

Bausch & Lomb’s stock price immediately jumped above the $65-a-share offer from Warburg Pincus -- reaching its highest level in more than a year -- which suggested that investors expect a higher bid. The maker of contact lenses and ReNu contact lens solution, among other eye care products, has 50 days to seek a higher bid. Bausch & Lomb shares closed up $6 to $67.50.

The offer, which also calls for the private equity firm to assume $830 million in debt, is only a 5.7% premium to Bausch & Lomb’s closing stock price of $61.50 on Tuesday. But its shares have been on a sharp ascent -- up about 25% since mid-March before Wednesday’s rally -- because of rumors that it would be a target of a leveraged buyout.

The Rochester, N.Y.-based company, which conducted a worldwide recall of its popular contact lens solution last year and was still recalling some product this year, has been struggling to overcome accounting troubles and product liability.

By going private, Bausch will be able to address its issues away from the investor spotlight, said Jeffrey Johnson, an analyst at Robert W. Baird & Co. Those issues include dealing with product liability lawsuits and getting its accounting in order as the company has not yet become current in its regulatory filings, Johnson said.

Jack Trout, president of advertising strategy firm Trout & Partners, said that Bausch & Lomb brands were tarnished by the recalls, but that their reputation could be restored.

“If they can pull back and regroup -- with Wall Street off their backs -- they might be able to do a better job of marketing themselves,” Trout said.