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AMO to acquire Visx in deal valued at $1.27 billion
Despite growing interest in lens-related procedures, the Star excimer laser franchise is expected to be important to AMO’s refractive surgery offerings.
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Advanced Medical Optics Inc. intends to acquire Visx Inc. in a stock and cash transaction valued at approximately $1.27 billion, the companies announced on Nov. 9.
The acquisition, which was unanimously approved by both companies’ boards of directors, involves approximately 29 million shares of AMO stock and $184 million in cash. Under the terms of the agreement, Visx stockholders will receive 0.552 shares of AMO stock and $3.50 in cash for every share of Visx common stock, totaling $26.52 per share of Visx common stock, according to a joint news release from the two companies.
Following the acquisition, which is expected to be completed during the first quarter of 2005, AMO stockholders will own approximately 58.5% of the combined company and Visx stockholders will own approximately 41.5%.
The combined company will retain the Advanced Medical Optics name and AMO’s Santa Ana, Calif., headquarters. The laser franchise will retain the Visx brand name, and Visx will continue manufacturing and research and development activities at its Santa Clara, Calif., site.
“We are a great believer in the power of brand, and we think Visx is one of the strongest, most recognizable brands out there. We will do everything we should do to retain that brand equity,” said Russ Trenary, AMO’s corporate vice president and chief marketing officer, in an interview with Ocular Surgery News.
Following the merger, Elizabeth Davila, Visx’s chairman and chief executive officer, will join AMO’s board of directors. Doug Post, Visx’s president and chief operating officer, will become president of AMO’s Americas region. Additional reorganization will occur to streamline general and administrative roles between the companies. Otherwise, Visx will continue operating as it has, Mr. Trenary said.
“The opportunity for us is to look at our global footprint, to look at the number of employees we have spread around the world ... and to figure out what we can do to leverage the strength and reach of AMO across the Visx product lines,” he said.
Leader in cataract, refractive
According to AMO, the merged entity will be the world’s leading provider of refractive surgical products. The addition of Visx’s laser franchise and CustomVue system will give AMO a comprehensive portfolio of refractive technologies. The AMO portfolio already includes the Amadeus II microkeratome, the Verisyse phakic IOL, and the ReZoom, Array and Tecnis IOLs.
Despite growing interest in lens-related procedures, AMO believes the laser franchise will be “vitally important” to its refractive offerings, Mr. Trenary noted.
“One of the things we see is that there is a complementary nature to these technologies. I think there are some patients who might come in for a phakic IOL procedure, ... but if a procedure is needed to correct a little astigmatism, or perhaps a little residual overcorrection or undercorrection, then the excimer laser is right there to finish the job. We are now able to provide the surgeon with a full armamentarium of technologies for dealing with refractive error, no matter how little or how much,” he said.
Mr. Trenary noted that because Visx did not offer a microkeratome, AMO has an opportunity to leverage additional business for its microkeratomes and blades.
“And then, as you think about product development, we will think about phakic IOLs and excimer laser treatments as a combined approach rather than two separate technologies,” he said.
Expanded reach for Visx
AMO’s global marketing and distribution capabilities present opportunities for expanding the market reach for the Visx laser, Mr. Post told OSN in a separate interview.
Because Visx has not had direct representation internationally, most of the company’s revenue — 85% — resulted from sales within the United States, he said.
Comparatively, AMO has a strong international presence, being directly represented in 20 countries and further represented through a network of distributors.
“Immediately that creates an opportunity where the ability to market internationally ... is picked up by [AMO] in direct representation,” Mr. Post said.
The merger also gives AMO access to an additional customer base, Mr. Trenary noted.
“There are a lot of ... ophthalmic surgeons who perform both cataract and refractive surgery. [The acquisition] ... gives us a stronger foundation from which to launch future refractive products. In addition, it introduces us to some new customers, because AMO is not as seasoned of a veteran in the refractive surgery industry as Visx. And lastly, it allows customers to choose a single partner for both cataract and refractive products, if they choose,” he said.
Future plans for growth
Mr. Trenary said that AMO plans to continue to follow the growth strategy generated during the company’s 2002 spin-off from Allergan.
“We are a purely medical device company in the eye care arena. We plan to invest heavily in research and development in order to fund organic growth. We plan to be smart and opportunistic in terms of looking at products, product lines or businesses that are currently outside of our four walls, but are consistent with our strategy,” he said.
“Initially we wanted to build a stronger foundation. And I think that when you look at the acquisition of the Pharmacia (Pfizer) products, ... that was a classic example of taking product categories that we were in and building a tremendous amount of strength, breadth and depth within those product areas. This Visx acquisition is different. Aside from putting us in the No. 1 position, it puts us in product categories that we were not in before,” Mr. Trenary said.
“Those are two different kinds of deals. One was foundation building and one was diversifying within the eye care arena. If the future is an indicator of the past, you could see more of that, both from an organic standpoint as well as from the standpoint of looking for outside opportunities,” he said.
For Your Information:
- Russell Trenary, corporate vice president and chief marketing officer for Advanced Medical Optics, can be reached at 1700 E. St. Andrews Place, P.O. Box 25162, Santa Ana, CA 92799-5162; 714-246-4947; fax: 714-246-5888; e-mail: russ.trenary@amo-inc.com.
- Doug Post, currently president and chief operating officer of Visx, and, following the merger, president of Advanced Medical Optics’ Americas region, can be reached at 3400 Central Expressway, Santa Clara, CA 95051; 800-246-VISX; fax: 408-773-7278.
- Advanced Medical Optics can be reached at 1700 E. St. Andrews Place, Santa Ana, CA 92799; 800-449-3060; fax: 866-872-5635; Web site: amo-inc.com. Visx Inc. can be reached at 3400 Central Expressway, Santa Clara, CA 95051-7122; 408-733-2020; fax: 408-773-7278.
- Michael Piechocki is an OSN Staff Writer who covers all aspects of ophthalmology, specializing in oculoplastics. He focuses geographically on Europe and the Asia-Pacific region.