Portfolio News
Advanced Medical to buy IntraLase for $808 mln
Reuters UPDATE 2
Mon Jan 8, 2007 11:24 AM ET
CHICAGO, Jan 8 (Reuters) - Advanced Medical Optics Inc. [EYE.N] said on Monday it will buy laser vision correction company IntraLase Corp. [ILSE.O] for about $808 million, gaining its rival's popular blade-free technology.
The cash deal, valued at $25 a share, represents a 12.5 percent premium over IntraLase's closing price on Friday of $22.23 on the Nasdaq stock market. Advanced Medical Optics said it expects to complete the acquisition early in the second quarter of 2007.
"This deal has long been speculated in the market because IntraLase's femtosecond laser technology is becoming the standard of care for creating a corneal flap during Lasik surgery," Prudential Financial analyst Lawrence Biegelsen wrote in a research note. A femtosecond is one quadrillionth of a second.
The deal is subject to the approval of regulators and IntraLase stockholders. Advanced Medical Optics, of Santa Ana, California, holds a roughly 60 percent share of the Lasik vision correction market.
Lasik, or laser-assisted in-situ keratomileusis, surgery to restore 20/20 vision, is a two-step procedure in which a flap is cut in the cornea, traditionally with a blade. Then, a laser is used to reshape the eye so it can properly refract light.
IntraLase, based in Irvine, California, makes a laser to create the corneal flap, eliminating the need for a blade.
"The laser technology is perceived to be safer and studies have shown the outcomes to be superior," Biegelsen said. "The laser technology also carries a price premium and is growing rapidly."
Advanced Medical Optics said it expects the transaction to dilute its adjusted earnings per share in 2007 but to add slightly to adjusted EPS the year after.
Including the acquisition, it forecast 2007 adjusted earnings per share of $1.40 to $1.55 on revenue of $1.15 billion to $1.18 billion.
It previously forecast $1.85 to $2 per share on revenue of $1.06 billion to $1.08 billion. Analysts polled by Reuters Estimates were expecting earnings of $1.79 per share on revenue of $1.05 billion.
For 2008, it forecast earnings per share of $2.25 to $2.40 on revenue of $1.35 billion to $1.37 billion. Analysts polled by Reuters Estimates were expecting $2.35 per share on revenue $1.12 billion.
Investment bank UBS is lead financial adviser and Goldman Sachs is co-financial adviser on the deal. UBS also is the lead arranger on a $900 million acquisition facility for Advanced Medical Optics. Bank of America and Goldman Sachs are acting as joint arrangers for the facility.
IntraLase's lead financial adviser is Bank of America and JPMorgan is co-financial adviser.
Shares of Advanced Medical Optics rose 14 cents to $34.13 in morning trading on the New York Stock Exchange. Shares of IntraLase rose $2.25, or 10.1 percent, to $24.48 on Nasdaq.