Updated from 11:08 a.m. EDT
After more than two months of
Bausch & Lomb
, specialty contact lens maker
Wesley Jessen VisionCare
rebuffed the takeover bid of the No. 1 maker of soft contact lenses by market share, signing on Tuesday to be bought by
for about $785 million in cash.
The move will form the second-largest contact lens company in the world by revenue behind
Johnson & Johnson
Bausch & Lomb conceded that it had lost its fight for now, saying Tuesday morning that it is withdrawing its tender offer for Wesley Jessen. "We view our best and final offer to have been a full and fair price for Wesley Jessen and do not intend to raise it," William Carpenter, chairman and chief executive of Bausch & Lomb, said in a statement. "In the event that the transaction between Wesley Jessen and Ciba is not completed, we would consider renewing our tender offer at a similar price."
Investors clearly favored the deal, as shares of Wesley Jessen rose 12%, or 4 1/8, to 37 5/16 on the news in Tuesday midday trading. (Wesley Jessen closed up 3 11/16, or 11%, at 36 7/8.)
The acquisition cancels the March 20 all-stock merger
agreement between Wesley Jessen and
, which was valued at $552 million on Friday.
Ciba Vision, the eye care unit of
, the fourth-largest pharmaceutical company in the world, based in Basel, Switzerland, trumped Bausch & Lomb by agreeing to pay $38.50 a share for Wesley Jessen, based in Des Plaines, Ill., a premium of 8% to Bausch & Lomb's last bid. The offer is also a 16% premium to Wesley Jessen's closing price Friday of 33 3/16 and a 55% premium to its closing price on March 22, the day before Bausch & Lomb made its first offer.
The deal is expected to close in the third quarter of this year. However, analyst Suey Wong of
Robert W. Baird
cautioned that Ciba, which makes contact lenses, lens care products and drugs for eyes, may have to divest its color contact lens manufacturing business in the U.S. to satisfy regulatory authorities. After all, Wesley Jessen is the No. 1 developer, manufacturer and marketer in the $750 million specialty soft contact lens market, which includes cosmetic lenses that change or enhance the wearer's eye color. It's the second-largest growth segment for contact lenses. Ciba is the No. 2 maker of color contact lenses in the U.S.
Wong rates Wesley Jessen a strong buy and his firm participated in a secondary offering for the company last May.
Days after Wesley Jessen agreed to buy Ocular Sciences, Bausch & Lomb swooped in with an
offer of $34 a share in cash for Wesley Jessen. Wesley Jessen rejected both that offer and the subsequent offer of $35.55 a share in cash, at the same time that it announced discussions with a third party that would conceivably consider buying Wesley Jessen as well as Ocular Sciences.
Ocular Sciences, though left in the cold, is $25 million richer after collecting the breakup fee from Wesley Jessen.
Wesley Jessen and Ciba Vision had pro forma sales of $1.4 billion in 1999.
There was no action in Novartis' American depositary receipts. However, shares of Ocular Sciences tumbled 9%, or 1 3/8, to 13 5/8 in Tuesday midday trading, while shares of Bausch & Lomb dropped 1/16 to 71 7/8. (Ocular Sciences finished down 1 3/4, or 12%, at 13 1/4, while Bausch & Lomb closed up 1/16, 0.09% at 72.)