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Wesley finds white knight
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May 30, 2000: 9:53 a.m. ET
Novartis tops Bausch & Lomb hostile bid with $785M offer for contact lens firm
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NEW YORK (CNNfn) - Novartis AG agreed Tuesday to acquire specialty contact lens maker Wesley Jessen VisionCare Inc. for $785 million in cash, trumping a hostile $625.6 million bid from rival Bausch & Lomb, which subsequently withdrew its offer.
The Switzerland-based Novartis will pay $38.50 per share for Wesley Jessen, which has been trying to fend off a hostile bid from Bausch & Lomb (BOL: Research, Estimates). The Des Plaines, Ill.-based maker of colored contact lenses would become part of Novartis' CIBA Vision Corp., a provider of contact lenses, lens care products and ophthalmic pharmaceuticals.
The offer represents a 17 percent premium over Wesley Jessen's (WJCO: Research, Estimates) closing price of 33-3/16 Friday and a 55 percent premium above the company's closing price of May 22, the day before Bausch & Lomb officially launched its hostile bid, asking shareholders to tender their shares for $35.55 per share cash.
Combined, Wesley Jessen and CIBA generated $1.4 billion in sales during 1999, which would rank the combined entity as No. 2 behind market leader Johnson & Johnson (JNJ: Research, Estimates).
Just hours after the deal was announced, Bausch & Lomb withdrew its offer, saying the deal was no longer attractive financially.
"We considered the acquisition of Wesley Jessen to be strategically appropriate for this company, but only at a price that is attractive to the Bausch & Lomb shareholders," said William Carpenter, Bausch & Lomb's chairman and chief executive.
 Wesley Jessen shares soared 4-1/8 to 37-5/16 around noon Tuesday, while Bausch & Lomb fell 5/16 to 71-15/16. Novartis shares closed down 0.8 percent at 2,485 Swiss francs in Zurich.
Wesley Jessen announced more than a month ago that it had opened discussions with an unidentified third party, hoping to strike a richer deal than the $598 million offer Bausch & Lomb originally put on the table.
Analysts consider Wesley Jessen one of the most attractive acquisition targets in the contact lens business because it is the world's No. 1 producer of popular tinted contact lenses, providing an instant growth engine for any maker of standard contact lenses.
"Wesley Jessen has an incredibly valuable franchise in its specialty contact lens business and I've long felt that it's been unappreciated," said Andrew Jay, an analyst with First Union Securities. "Novartis offers a strong international presence and they really need a growth driver right now, which Wesley Jessen provides."
At the time of its $625.6 million unsolicited offer, Bausch & Lomb officials called the bid the company's "best and final" offer, hoping to pressure shareholders into tendering their shares.
Bausch & Lomb chairman and CEO, William Carpenter, appeared to soften that position in a release last week, saying his company would "evaluate our offer in the context of any competing alternative." But, Tuesday Carpenter said his company would not revisit a Wesley Jessen acquisition unless the CIBA deal fell through.
Novartis will commence a tender offer for Wesley Jessen shares within five business days and hopes to complete the transaction during the third quarter. Novartis must gain the support of at least 51 percent of Wesley Jessen's shares to complete the deal.
Ocular deal cancelled
In conjunction with the acquisition, Wesley Jessen has terminated its previous merger agreement with Ocular Sciences (OCLR: Research, Estimates) and paid a $25 million termination fee.
Officials on both sides of the Novartis-Wesley Jessen merger trumpeted its growth potential.
"Wesley Jessen will be able to expand its international sales with the support of CIBA Vision's global sales and marketing operation, and CIBA Vision will benefit from Wesley Jessen's technological expertise, especially in the area of specialty lenses," said Glen Bradley, chief executive of CIBA Vision.
CIBA, based in Duluth, Ga., markets contact lens products in nearly 90 countries and last year boasted sales of approximately $1 billion. 
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