Bausch and Lomb approves merger with Warburg Pincus

It took only six minutes to approve the merger between Bausch and Lomb and Warburg Pincus. While there were a few dozen shareholders at Friday's meeting, most had already mailed in their vote.

The voters who cast their ballot represented roughly 40 million of the company’s 55 million shares. Shareholders will leave the agreement with a $65 per share price which will be subject to capitol gains taxes. The agreement makes Bausch and Lomb a private company for the first time in more than 50 years.

“It was actually much closer than I would have imagined,” says Michael Weintraub, a B & L shareholder since 2002.

The top concern among several shareholders who attended the meeting was making sure the eye care giant’s headquarters remained in Rochester.

“I think it's the best thing that could have happened really. Rather than go with a competitor that would have merged services and probably moved them out of the City, or out the area I should say, I think it's a good thing,” says Mary Finucane, a 30 year shareholder in B & L.

The next major concern for many of meeting’s attendees was keeping employee benefits intact, specifically health insurance.

“What's going to happen with our health insurance? Is it going to continue on or is it going to drop and, if it's going to drop, when? “ says Ken Gill of Charlotte.

 “That's what I'm concerned about is that we'd be losing our benefits, some of our medical,” says Mary Rogers of Pittsford. Rogers is a former B & L employee and current shareholder in the company.

Bausch and Lomb received the two-thirds majority it needed to merge but, there are lingering concerns.  Some shareholders wonder if Warburg Pincus will live up to its promises. The company has promised no major changes to the current employee base in Rochester, no name change to the company and to keep B & L’s headquarters in Rochester.

“I want to see people have jobs in Rochester, this is my home, that's what I want to see. I don't want Bausch and Lomb to pull out of here,” says Joseph Palis, a shareholder who voted against the merger.  

“They're businesspeople and they're going to do what businesspeople do and chances are, it would be great if they didn't but, I'm still skeptical about the whole situation,” says Greg Palis, a former shareholder who attended Friday’s meeting.  

Warburg Pincus is a private equity company based in New York City. Medical companies such as Bausch and Lomb make up only a segment of its investment portfolio. The company is also invested in retail giants such as Mattel and Neiman Marcus. WP was established in 1971 and currently has $20 billion dollars in assets.

Why did Bausch and Lomb decide to merge?

“It should also allow us look a little further out into the future without the pressures of having to make Wall Street's quarterly earnings expectations,” says Ronald Zarella, CEO and board chairman of Bausch and Lomb.

Zarrella commented to the press about the agreement shortly after Friday’s vote. Zarrella pointed to the 2006 recall of B & L’s Renu contact lens solution with “Moisture Loc” as a major reason behind the merger with Warburg Pincus.

“The recall had quite a significant financial effect on the company.The stock performance was affected by the recall by an overwhelming factor.”  

Renu with "Moisture Loc" was pulled from store shelves around the world after being considered a possible source of a nasty eye infection called fusarium keratitis.  Bausch and Lomb continues to recover from the recall, spending millions to counter lawsuits around the globe.

“Like I said, we have insurance coverage and that's a function of how many cases you take to court, how many cases you settle,” says Zarrella who, will not walk away from the final merger with any bonuses other than his stock in the company. Zarrella says he plans to stay with Bausch and Lomb.

“Their goal and my goal right now are the same, to get the company's momentum accelerating and back on a better growth path.”