Bausch + Lomb considers sale: Stock soars

The stock of Bausch + Lomb experienced a significant increase today, as the company is possibly considering a sale. Bausch + Lomb, a subsidiary of Bausch Health Companies, was once known as Valeant Pharmaceuticals. Valeant encountered difficulties nearly a decade ago after acquiring several pharmaceutical companies through debt, subsequently cutting research budgets, and raising prices. Following a debt crisis and a drastic stock price decline, the management was replaced, and the company was renamed Bausch Health in 2018. In 2022, Bausch Health sold part of its shares in Bausch + Lomb through an initial public offering (IPO), generating $630 million in proceeds. Nevertheless, Bausch Health still retains 88% of B+L's shares. Over the weekend, the Financial Times reported that Bausch + Lomb is now considering a full sale. Initially, Bausch Health planned a spin-off of the division through a share swap between Bausch Health and B+L. However, Bausch Health's lenders rejected this plan. Given B+L's more robust performance compared to the overall company, the lenders prefer either retaining the division or a full sale to generate cash. Bausch Health Companies remains heavily indebted, with approximately $21 billion in debt. However, only $4.6 billion is attributable to B+L. Concurrently, Bausch + Lomb is projected to achieve $4.7 billion in revenue and an EBITDA (earnings before interest, taxes, depreciation, and amortization) of $860 million this year. Therefore, the remaining business of Bausch Health would still be burdened with significant debt in the event of a spin-off. The market appears optimistic, as Bausch Health Companies' stock also rose by 10.7% today. This suggests that investors expect B+L to command a good premium in the event of a sale, which would enable Bausch Health to substantially reduce its debt.