Normally, I’d leave this alone. It only tangentally connects to New Merck, in any sense. However, it’s a quiet Friday here in the office, so. . . I’ll comment on this WSJ-sourced rumor piece.
While it is true that Valeant, a Canadian outfit, has shown a true proclivity for bidding into deal spaces, recently — it has closed very few of those it has set out to hunt down — and none, in this size range, as far as I can tell.
At (a rumored) more than three times B + L’s TTM sales revenue, this would be very rich pricing, indeed. Recall that no one would firmly offer to pay Mr. Hassan’s wanted $10 billion price, at the end of last year. Recall also that B + L has spent quite a bit to get ready for an IPO, this Spring.
Knowing Fast Fred as I do, it wouldn’t shock me if this is simply a “stalking horse” rumor, to get the IPO fires stoked — and get potential retail investors in such a planned IPO thinking that the newly public company called B + L (soon to be renamed from the awful WP Prism, Inc.) could at some future point be “flipped” — at near these valuations. Get ’em hearing the sizzle — then deliver no steak. . . That’s Fred’s usual way.
In any event, for what it’s worth — here is a bit of the WSJ piece — do go read it all:
. . . .Bausch & Lomb, which is owned by private-equity firm Warburg Pincus LLC, could strike a deal to be sold to Valeant next week, the people said. The deal isn’t done yet and could still fall apart, one of the people cautioned.
Should that happen [Valeant deal falls apart], Warburg and Bausch & Lomb could proceed with an initial public offering of stock in the eye-care company that had been planned. . . .
Me? I’ll be surprised if it does turn out to be true — certainly, at that $9 billion price. Note that I added the bracketed matter to the quote, to clarify what the writer meant. If the deal falls apart, Fred has now already been able to generate some great (pre-IPO) “quiet period” pump-priming rumors. Normally, rumors a-swirling are no big deal — but if he uses them to help him flog the stock, prior to SEC granting the IPO an effectiveness order, he’s likely to be in some hot water. [I wonder if the SEC will open a jacket on this one, as well — if such a leak were traced back to B + L, or its bankers, or Warburg Pincus — that would be a plain violation of about a dozen SEC rules.]
Yep — this looks to me like some cha-cha to help sell the initial public offering of B + L stock, in the next couple of weeks. To be clear, I expect that Valeant is actually in talks, and actually believes it might “win” the deal. I just think Valeant may be serving as Fred’s cannon-fodder — for the IPO. But what do I know?