Warburg Pincus will sell eye care business Bausch & Lomb to Canada’s Valeant Pharmaceuticals for $8.7 billion.
Warburg declined to disclose a return multiple for the deal, but a source with knowledge of the situation said the transaction would generate roughly a 3x return multiple for the firm. Warburg invested in the company using capital from its $8 billion Fund IX and $15 billion Fund X, the source said.
Bausch & Lomb operates in the pharmaceutical, vision care and surgical segments of the eye health market. The deal will deliver about $4.5 billion to an investor group led by Warburg, which took the company private in 2007 for roughly $3.67 billion. The remaining $4.2 billion will be used to repay Bausch & Lomb’s outstanding debt, according to a statement.
The transaction, which will be financed with debt and between $1.5 billion and $2 billion of equity, is expected to close during the third quarter of 2013.
Bausch & Lomb is expected to generate revenues of about $3.3 billion and adjusted earnings before interest, tax, depreciation and amortisation of roughly $720 million in 2013. The company will retain its name and become a division of Valeant.
The exit comes just two weeks after Warburg closed its Fund XI on $11.2 billion, marking one of the largest buyout funds to close since the financial crisis of 2008. Warburg Pincus Private Equity XI had an official target of $12 billion but the firm decided to close the fund after 18 months in market, and within one year of its first close, rather than continue the fundraising process, according to a source with knowledge of the situation.
Warburg’s sale of Bausch & Lomb is the fourth multibillion dollar private equity transaction announced in 2013. Earlier this month, Bain Capital led an investor group including Golden Gate Capital to acquire listed software maker BMC Software for about $6.9 billion. That deal followed Silver Lake’s $24.4 billion take-private of PC manufacturer Dell and Brazilian investment firm 3G Capital’s $28 billion buyout of Heinz.
Warburg invested about $2.3 billion in 28 new companies in 2012 and distributed $6.2 billion back to LPs. During the first quarter of 2013, the firm returned an additional $3 billion back to investors.
Warburg’s acquisition of Bausch & Lomb in 2007 nearly fell through after trade buyer Advanced Medical Optics placed a higher bid of $75 per share compared to Warburg’s offer of $65 per share. Advanced Medical later withdrew its competing offer after the board of Bausch & Lomb refused to grant Advanced Medical more time to prove it had sufficient shareholder support for its $75 per share bid.