AMO withdraws takeover bid for Bausch & Lomb

Advanced Medical Optics has withdrawn its bid to buy Bausch & Lomb for $75 per share, according to a letter issued to Bausch & Lomb by James V. Mazzo, AMO president, chairman and CEO.

AMO made the decision after Bausch & Lomb refused to grant it more time to prove it could gain adequate shareholder support to approve the proposed acquisition. An investment firm owning 14.7% of AMO recently said it would vote against the bid, which prompted Bausch & Lomb to request such proof.

Mr. Mazzo, in his letter to Bausch & Lomb's board of directors, said Bausch & Lomb had imposed "unrealistic hurdles" on AMO by refusing to grant the company adequate time to provide the requested information "in a manner that would be meaningful."

"If, in the future, you decide to run a process that is designed to deliver value to your shareholders, please let us know," he said.

Bausch & Lomb had been weighing AMO's cash and stock offer against the $65 per share all-cash offer made by private equity firm Warburg Pincus in mid-May. Bausch & Lomb's board accepted Warburg Pincus' offer at that time, but was allowed to solicit superior offers during a 50-day "go shop" period.

AMO's offer came on July 5, the last day of the go shop period. Under a provision in the Warburg Pincus agreement, Bausch & Lomb named AMO an "excluded party," meaning negotiations could continue beyond the 50-day mark.

AMO was the only company designated as an excluded party.

On July 24, Bausch & Lomb informed AMO that it believed Warburg Pincus' offer was likely superior and gave AMO until Aug. 3 to provide "concrete, credible evidence" of shareholder approval.

AMO responded that it needed several weeks to convince its shareholders of the deal's potential value, which it had predicted could save the combined company $180 million annually.

Many analysts had voiced concern that the stock portion of AMO's offer posed significant risks when compared with Warburg Pincus' all-cash offer. A buyout by AMO also faced regulatory hurdles, whereas the Warburg Pincus transaction had already been approved by the U.S. Securities and Exchange Commission.

In order for Bausch & Lomb to complete its agreement with Warburg Pincus, the company must now gain the approval of at least two-thirds of its shareholders.