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Major AMO shareholder opposed to Bausch & Lomb buyout
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ValueAct Capital, an investment firm that owns 14.7% of Advanced Medical Optics, plans to vote against AMO's proposed $4.3 billion buyout of Bausch & Lomb, according to a letter filed with the Securities and Exchange Commission.
AMO needs shareholder approval to proceed with the deal.
"The proposed acquisition increases business risk by further concentrating AMO cash flows in a consumer contact lens and lens care business that is clearly prone to product recalls," ValueAct partners Jeffrey W. Ubben and G. Mason Morfit wrote in the letter, dated July 10.
Mr. Ubben and Mr. Morfit also pointed to the fact that AMO's share price and earnings per share have shown little progress over the last 3 years.
"When you have yet to deliver actual earnings, it is unrealistic to ask us to believe you can execute an acquisition of the magnitude of B&L," they said.
In a response letter written today, AMO chairman, president and CEO Jim Mazzo said he was "surprised and disappointed" by ValueAct's opposition and strongly disagreed with its assessment of the contact lens care business.
"This market has attractive long-term growth rates and, as you well know, has always been a central part of our complete refractive solution strategy," he said.
Since AMO proposed to buy out Bausch & Lomb last week, the companies have entered into negotiations of indeterminate time period. Both companies have declined to provide a timeline of these discussions.