Bausch & Lomb Inc. decided to share company's $3.67 billion (2.61 billion EUR) with private equity firm Warburg Pincus.
The company's board agreed to the $65-a-share buyout in May, prompting an unsolicited counter bid by rival Advanced Medical Optics Inc. But Santa Ana, California-based Advanced Medical withdrew its $4.2 billion (2.99 billion EUR) cash-and-stock offer in August, saying Bausch & Lomb had put up unrealistic hurdles to a potential deal.
During an eight-minute special meeting of investors, Bausch & Lomb's chief executive, Ron Zarrella, said shareholders representing more than two-thirds of the stock voted in favor of the takeover by Warburg Pincus, a buyout and venture capital firm in New York.
The deal, which is expected to close in late October, will allow Bausch & Lomb "to pursue the growth path we were on, the strategies we were on, without a lot of outside distraction," Zarrella said.
Warburg Pincus' owners, he added, "like what we have here, they like the path that we're on, they think we can make a comeback from the difficulties of last year."
Bausch & Lomb, which makes contact lenses, ophthalmic drugs and vision-correction surgical instruments, posted $2.3 billion (1.64 billion EUR) in sales last year and employs 13,000. The 154-year-old company was rocked in May 2006 by the worldwide recall of a lens solution blamed for a flurry of potentially blinding fungal infections.
Federal regulators called the $100 million (71 million EUR) -a-year ReNu with MoistureLoc multipurpose cleaner the "potential root cause" of an outbreak of Fusarium keratitis infections in the United States, Asia and other parts of the world. Lawyers expect several hundred people will seek damages.
Advanced Medical had offered $45 in cash and $30 in stock on July 5, the final day of a 50-day period set aside for other buyers to make a better bid.
After some of Advanced Medical's major shareholders came out against the takeover move, Bausch & Lomb asked its rival's chief executive, James Mazzo, to provide "concrete, credible evidence" of its ability to win over shareholders. Mazzo asked for more time and, when Bausch & Lomb demurred, he reeled in his offer.
Zarrella, who took the helm at Bausch & Lomb in 2001, holds options for 1.1 million shares, most with strike prices ranging from $29.84 to $37.68. With the buyout, he earns $29.2 million (20.78 million EUR) and is entitled to an extra $10.1 million (7.2 million EUR) payout if his job is terminated "without cause," regulatory filings show.
"I intend to stay with the company as long as they want me," Zarrella said.
Bausch & Lomb, which had been publicly traded for 69 years, will "probably" return to public ownership within the next five to seven years, Zarrella said. "In mergers our size, the typical method is to become public again," he said.
"We will definitely be staying in Rochester," he said. "It's where the heritage of the company is and we have very substantial R&D and manufacturing operations here."
Bausch & Lomb's shares rose 10 cents to $63.73 in early afternoon trading Friday.