Seeking to further ensure its leading position in the laser vision correction market, Advanced Medical Optics Inc. (AMO; Santa Ana, CA) plans to acquire IntraLase Corp. (Irvine, CA) in an all-cash deal valued at $880 million. Although AMO controls about 60% of the worldwide surgical instrument market for laser-assisted in-situ keratomileusis (LASIK) procedures, use of IntraLase's femtosecond laser is increasingly seen as the standard of care in many ophthalmic surgery suites around the world.

The laser replaces traditional handheld blades and enables surgeons to provide greater accuracy and patient safety in creating a corneal flap, which is the initial step in the LASIK procedure. Used by more than 1200 ophthalmic surgeons in 33 countries, as well as in teaching hospitals, medical schools, and eye-care institutes, the fourth-generation device generates 60,000 pulses of infrared light per second.

"This acquisition offers significant strategic value by further establishing AMO as the global refractive technology leader, positioning us with a broad range of technologies and expertise to serve the needs of comprehensive refractive practices," said Jim Mazzo, AMO chairman, president, and CEO. "We believe the transaction benefits eye care practitioners and their patients by bringing together state-of-the-art technologies to define a new standard of care in laser vision correction."

Medtech analysts generally applauded the transaction. The acquisition allows AMO to add to its roster of eye-care technologies. By picking up IntraLase's high-speed femtosecond laser, AMO can provide what it describes as "a complete refractive solution--with a suite of corneal and lens-based products and services that address a lifetime of refractive vision needs." Commercial applications of IntraLase's laser technology for corneal transplant surgery are expected in the near term.

IntraLase president and CEO Robert J. Palmisano said the deal will accelerate the advancement of the femtosecond laser in a coordinated way with AMO's market-leading excimer laser technology. He added that such development will provide "the opportunity for further innovation and beneficial refinement of LASIK procedures that can and should grow the overall LASIK market."

With 3440 employees, AMO generated $920.7 million in revenues for 2005, a 24% increase over 2004 revenues of $742.1 million. With 267 employees, IntraLase posted 2005 revenues of $94.4 million, a 57.5% increase over year-earlier revenues of $59.9 million.

The transaction, which is subject to regulatory and shareholder approval, is expected to close by the end of the second quarter.

Eight days after announcing its decision to purchase IntraLase, AMO further beefed up its portfolio of ophthalmic products with the acquisition of WaveFront Sciences Inc. (Albuquerque, NM) for $14 million. The cash transaction includes financial incentives that could add another $6 million to the purchase price if certain performance milestones are achieved. The privately held company manufactures aberrometers, which are used to measure the total refractive error and wavefront aberrations of the human eye. The devices are used in laser vision correction surgery as well as medical research.

"With this transaction, we secure proprietary technologies and research and development expertise in wavefront sensing and laser optics, which we expect will allow us to further strengthen our Advanced CustomVue laser vision correction technology and accelerate the introduction of next-generation diagnostics that build on our WaveScan Wavefront systems," Mazzo said.

© 2007 Canon Communications LLC

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