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Advanced Medical Optics to Buy Visx

Times Staff Writer

Santa Ana-based Advanced Medical Optics Inc. said Tuesday that it had agreed to acquire Visx Inc. of Santa Clara, Calif., in a $1.27-billion deal that would allow Advanced Medical to expand its product line to include laser vision correction technologies.

The deal, which sparked a rally in Visx shares in after-hours trading, would bring together two companies that hope to capitalize on recent advances in eye care and the demands of an aging population.

Visx, the leading U.S. maker of laser eye surgery gear, won federal approval last year to sell a “wavefront-guided” system for correcting nearsightedness that some believe will fuel growth in the vision correction market. For its part, Advanced Medical Optics received federal approval in September for an implantable contact lens, also known as a phakic lens.

“The baby boom population is looking to get rid of their glasses,” said Jim Mazzo, Advanced Medical president and chief executive. “We can provide” laser surgery or implantable lenses.

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Although Visx last month reported third-quarter earnings that were double year-earlier levels, the company had seen its fortunes fluctuate with the ups and downs of the laser eye surgery market, which cooled markedly after soaring in the late 1990s. It recorded revenue of $143.9 million last year, down from $271.2 million in 1999.

Combining with Advanced Medical would give Visx needed diversification, said Jennifer Hsu, an analyst at RBC Capital Markets.

“Under the umbrella of Advanced Medical Optics, I think [Visx] will be able to weather fluctuations a lot better because they’ll have such a diverse revenue base,” Hsu said.

The acquisition also would help Advanced Medical improve its operating margins and increase revenue, she said.

The company, which was spun off from Allergan Inc. in 2002 and recently completed the purchase of Pfizer Inc.'s eye surgery business, reported 2003 sales of $601.5 million. In the third quarter, it reported a net loss of $37.1 million, compared with a loss of $3.7 million in the third quarter of 2003.

Under the terms of the deal, Visx shareholders would receive 0.552 share of Advanced Medical stock and $3.50 in cash for each of their shares. The terms value Visx at $26.93 a share -- almost 49% above the company’s Tuesday closing price of $18.10 on the New York Stock Exchange.

The deal, which has already been unanimously approved by the boards of both companies, was announced after the market closed.

Visx shares, which rose $1.19, or more than 7%, during the regular session, soared as much as 34% to $24.25 in after-hours trading.

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Shares of Advanced Medical, up 74 cents to $42.44 in regular NYSE trading, dropped 12 cents after hours.

The deal requires approval of both companies’ shareholders and federal antitrust regulators. The companies anticipate that the transaction will close in the first quarter of 2005.

The combined company would retain the Advanced Medical Optics name, and the company’s headquarters would remain in Santa Ana, although there are no plans to shutter Visx’s Santa Clara operations, Mazzo said.


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