Bausch & Lomb Takes its Pick Between American Medical Optics and Warburg Pincus

Bausch & Lomb is presently considering two generous buyout offers from Advanced Medical Optics Inc. and Warburg Pincus. In a NewsVisual article published on May 17, 2007 (See article), we mapped the connections between Bausch & Lomb and Warburg Pincus and found a number of significant ties that validates the preference Bausch & Lomb seems to have for the private equity firm as a buyer. Despite Advanced Medical’s claim of presenting a superior offer, Bausch & Lomb continues to favor Warburg Pincus. To get to the bottom of Bausch & Lomb’s rationale in the deal, we decided to create an IntellectSpace Knowledge Map illustrating its connections to Advanced Medical, to then compare to our May 17 findings of its ties to Warburg Pincus.

This first Knowledge Map of Bausch & Lomb’s links to Advanced Medical certainly yields numerous connections. Robert F. Gallagher, who was a vice president of Bausch & Lomb until 2001, now serves as Senior Vice President, Chief Accounting Officer and Controller at Advanced Medical. His current senior financial position likely has him heavily involved in the planning process of acquiring Bausch & Lomb, and no doubt he is drawing on his past experience and connections to the company to facilitate a deal.

Another relationship that may bring these companies together exists through IntraLase Corp, which was acquired by Advanced Medical earlier this year. Franklin T. Jepson was at Bausch & Lomb for 16 years until 1999, most recently serving as Corporate Vice President of Communications and Investor Relations. His long tenure at the company probably resulted in various relationships with current Bausch & Lomb leadership members that continue to be maintained today.  Jepson can be linked to Robert J. Palmisano and William J. Link, who are both current members of the board at Advanced Medical. Link is a director and Palmisano is the Chairman and former CEO of IntraLase, where Jepson served as Vice President of Investor Relations and Corporate Communications after his departure from Bausch & Lomb. Though Jepson is no longer with Intralase, his time spent at the company alongside Palmisano and Link may have allowed for discussion of a potential partnership between Advanced Medical and Bausch & Lomb.

Click here for an interactive version of this IntellectSpace Knowledge Map (Internet Explorer browsers only): http://nv.intellectspace.com/ispace/GuestMonitor.aspx?id=4caaa0ff-ce26-4062-a535-09effaeb86ca

Even though Warburg Pincus is presently holding Bausch & Lomb’s favor, American Medical may still be able to maintain interest with yet another relationship. Diane Harris, another veteran executive at Bausch & Lomb, having served from 1981 to 1996 and various positions including Vice President of Corporate Development, can be connected to American Medical through Flowserve Corp. Harris presently sits on the board with James O. Rollans, American Medical’s presiding director. Based on their shared directorships at Flowserve, the two are bound to know each other, and acquisition discussions could have easily gotten back to a number of contacts that Harris has at Bausch & Lomb.

A final connection worth mentioning may be between Catherine M. Burzik, a Bauch & Lomb director and Christopher Chavez, who sits on the board at Advanced Medical. Both are connected to Kodak and Johnson & Johnson; each having served in several leadership positions. Since they both have histories two mutual companies, it is quite possible that they know each other, which could then influence a deal. 

The ties from American Medical and Bausch & Lomb are evident, especially considering the numerous past connections that exist through companies like Johnson & Johnson, Novartis, and Allergen, from which American Medical spun-off in 2002. If this is the case, why does Bausch & Lomb continue to be so interested in Warburg Pincus, which American Medical claims presented a lesser takeover offer? As with many corporate deals, the answer may lie in common connections.    

Click here for an interactive version of this IntellectSpace Knowledge Map (Internet Explorer browsers only): http://nv.intellectspace.com/ispace/GuestMonitor.aspx?id=45e33a61-d518-4400-8aff-2fe87a2769f2

As seen in this next Knowledge Map between Bausch & Lomb and Warburg Pincus, the companies show solid connections through shared board memberships and equity holdings. Some of these connections can be considered to be stronger than those presented in the previous map because they are between current members of either company (See full article).

If Bausch & Lomb chooses quality over quantity in terms of its connections to the companies, then we predict that unless Advanced Medical proposes a larger bid, Warburg Pincus will emerge the winner.