B+L Rumored to be Looking at Potential Sale to Fully Separate from Parent Company

Bausch + Lomb is exploring a potential sale to separate from Bausch Health, its parent company, according to a report from the Financial Times.

The Ontario, Canada-based company is working with advisers from Goldman Sachs to test interest from potential buyers, the Financial Times reported, citing people familiar with the matter.

Bausch Health owns an 88% stake in B+L.

The plans for the sale come at a time when Bausch Health’s lenders have raised issues regarding concerns over a planned spin-off of B+L because of the impact on the parent’s balance sheet.

According to a report from the Financial Times, Bausch Health accumulated $21 billion in debt, with almost $10 billion coming due by the end of 2027.

The report goes on to say that the concerns center around whether or not Bausch Health would be solvent after totally separating from B+L because of the debt.

During an August earnings call, Thomas Appio, Bausch Health’s CEO gave an update on the progress of B+L’s full separation.  

“The full separation of B+L continues to be a strategic priority,” Appio said according to a transcript of the call from Seeking Alpha. “We continue to evaluate strategies regarding the potential full separation with the objective of ensuring that any transaction results in two appropriately capitalized companies. Any decision regarding if and when a separation occurs, or its structure will be based on and subject to an assessment of all relevant factors and circumstance. Any potential separation will also be subject to shareholder and other applicable approvals.”

Related:B+L En Route to Becoming a Standalone Public Company

David Saxon, an analyst with Needham & Company, wrote in a research note that the sale wasn’t surprising and discussed potential buyers for B+L.  

“Given this, we aren't surprised to hear B+L is exploring a potential sale, and we believe private equity is the most likely buyer,” Saxon wrote in a research note. “There are only a few strategics that would make sense, in our view, and all would likely run into anti-trust challenges.”

Saxon added, “Medical device peers Alcon, Cooper Companies, and Johnson & Johnson would encounter anti-trust issues given each has anywhere from 25-40% of the contact lens market (BLCO has around 10%). In pharmaceuticals, AbbVie would also encounter anti-trust issues given its Restasis has 45% of the Rx dry eye market volume (B+L has around 40% with its Miebo and Xiidra).”

Shares of B+L were up by 13% on news of plans to explore a sale.