Advanced Medical Optics says ValueAct's objections based on inaccurate, misleading information

By Jennifer Lanning Drey

Portland, Ore., July 12 - Advanced Medical Optics said shareholder ValueAct Capital's objections to the company's proposed acquisition of Bausch & Lomb Inc. include numerous inaccurate and misleading statements about the proposed transaction.

Advanced Medical Optics chief executive officer James Mazzo detailed the objections in a letter sent to ValueAct on July 11 and included in an 8-K filing with the Securities and Exchange Commission.

In the letter, the CEO said ValueAct's characterizations of Advanced Medical Optics' earnings and guidance updates were "grossly misleading" because they did not include reference to the context in which they were made.

Specifically, Advanced Medical Optics said one-time charges referenced by ValueAct were for acquisitions and repositioning efforts made in the latter half of a five-year period and most of the accretion and value will be generated in future years.

The statement was in response ValueAct's previous assertion that from 2002 to 2006, Advanced Medical Optics had recorded cumulative one-time costs of $595 million that "more than entirely offset cumulative operating profits of $445 million."

Additionally, Advanced Medical Optics questioned ValueAct's analysis of the collarless equity component of the deal and specified that the June 29 proposal was for a fixed number of shares. Advanced Medical Optics said including a collar could have increased the number of shares it would be required to issue, thereby diluting stockholders' interest.

ValueAct had accused the company of ceding collar protection in the proposal, "thus trading significant risk of dilution to current shareholders in order to stay in the hunt."

In addition, Advanced Medical Optics told ValueAct that it disagreed with its assertions of the long-term demand profile of the contact lens and lens care business, which the investor had called "much more questionable than that of Advanced Medical Optics' surgical business."

Advanced Medical Optics also defended its review of potential antitrust issues and said it is confident it will be able to address the issues in a timely manner.

Advanced Medical Optics is a Santa Ana, Calif.-based provider of ophthalmic surgical devices and eye care products.

Bausch & Lomb is a Rochester, N.Y.-based eye health company.

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