ISTA Pharma accepts $500 million bid from Bausch & Lomb; settles royalty dispute

US ophthalmic drugmaker ISTA Pharmaceuticals (Nasdaq: ISTA), which rejected a hostile takeover bid from Canadian firm Valeant Pharmaceuticals (The Pharma Letter January 31), has succumbed to an offer of $500 million - or $9.10 per share -from eye care giant Bausch & Lomb (NYSE: BOL). The transaction, which has been unanimously approved by the boards of directors of both companies, is expected to close in the second quarter of 2012.

The purchase price reflects a 10% premium to ISTA’s share price at market close on March 23, 2012, a 40% premium to the $7.50 – or $327 million – offered by Valeant and a 134% premium to the price on December 15, 2011, the trading day prior to ISTA's announcement of the proposal letter it received from Valeant, which ISTA described as “grossly inadequate.

The combination adds ISTA's portfolio of industry-proven non-steroidal, anti-inflammatory, allergy, glaucoma and spreading agents to Bausch & Lomb's complementary portfolio of existing prescription ophthalmology and over-the-counter (OTC) eye health products. The companies also have complementary development pipelines. ISTA's pipeline includes candidates in various stages of development to treat various ocular conditions including inflammation and pain, while Bausch & Lomb's pipeline of pharmaceutical innovations include the first of a new class of ocular anti-inflammatory agents to come along in decades, and a promising approach to reducing intra-ocular pressure in patients with open-angle glaucoma or ocular hypertension.