This post was originally published on this site
https://i-invdn-com.investing.com/news/LYNXMPEB2C0AG_M.jpg
BLCO shares are currently up more than 5% at $20.20 after initially hitting a high of $21.95 per share.
The company, through an affiliate, will acquire XIIDRA, libvatrep, and AcuStream in a deal worth up to $2.5B, including an upfront payment of $1.75B in cash with potential milestone obligations up to $750 million based on sales thresholds and pipeline commercialization.
Bausch + Lomb said it has obtained fully committed financing from J.P. Morgan for the deal and intends to finance the $1.75B upfront cash purchase price with new debt prior to closing.
“This acquisition is a prime example of our strategy in action, as it provides needed scale for the company and transforms our pharmaceuticals business by making us a leader in ocular surface diseases,” said Brent Saunders, chairman and CEO of Bausch + Lomb.
Reacting to the news, Citi analysts, who have a Buy rating and $22 price target on BLCO, said they are encouraged by the portfolio build-out in the double-digit growing DED market.
In addition, the firm is “cautiously optimistic on expectations for the transaction to be revenue accretive (Xiidra delivered $487M, up 4%, in 2022) with greater confidence in its financial leverage and accretion to operating margins.”
Morgan Stanley analysts stated that the ‘theoretical maths holds up,” but more details are needed.
“Strategically we could understand the move, though details needed,” said the analysts. “We think the maths (+4% accretion, 3x net debt / EBITDA in 2024) and strategic direction make sense for B+L, with Xiidra helping to scale off the company’s over-sized distribution base today. Some controversy amongst clients given generic moves in Restasis and historic transaction price (Novartis paid $3.4bn for Xiidra), but net net we think the deal generally makes sense to us.”
