Bausch + Lomb is widely considered the crown jewel held within the Bausch Health portfolio. August 27, 2020 - Update. And if BHC were to progressively unload its share of BLCO at current market conditions and used the proceeds to extinguish debt it would eliminate over $5 billion in debt. When a spinoff's shares start trading on a stock exchange, the value of the parent company's stock may drop by the value of the new company's stock. As we pointed out in a recent article, Bausch + Lomb is the recent spinoff of core brand Bausch Health Companies (NYSE:BHC). And did I mention that market capitalization includes a 90% stake in BLCO? However, the EV/EBITDA multiple for the industry is approximately 12. Upon completion of the IPO, Bausch + Lomb will trade on the NYSE and Toronto stock exchanges under the ticker BLCO. BLCO stock has surged, while BHC stock is currently down approximately 3%. dvelopper et amliorer nos produits et services. She has been an investor, entrepreneur, and advisor for more than 25 years. Price Target $22.95 ( 39.60% upside) Analyst Consensus: Buy Stock Forecasts News All Videos Press Releases Conversation When Valeant acquired Bausch + Lomb, the eye products company's annual revenue was nearly $1.3 billion. If you have an ad-blocker enabled you may be blocked from proceeding. - Bausch Health Companies Inc. stock plummeted by a quarter Tuesday morning after the company missed earnings expectations and lowered its outlook for the year. Given the market conditions and no S1 being filed for Solta, the IPO may not go through. This . All investments are encumbered with the risk of catastrophe, such as, in this case, BHC's pharmaceutical business being hit with surprise lawsuits or the macro environment deteriorating to an extent as to render BHC's stake in BLCO as worthless on paper. All rights reserved., source Canadian Press DataFile. Spin-Off vs. Split-Off vs. Carve-Out: What's the difference? Founded in 1853, Bausch + Lomb has a significant global research and development, manufacturing and commercial footprint with more than 12,000 employees and a presence in nearly 100 countries. Since BLCO IPOed, it has traded as low as $16.24 and sits at $17.01 as of May 31. Even though management intends to distribute 80% of BLCO to shareholders and sell its stake in Solta Medical via an IPO in order to pay off debt, BHC is worth more now than the market is valuing it even if the restructuring does not take place. By my preliminary estimates, BHC loses at. Bausch Health is unlocking value by spinning off into 3 separate companies. If BHC can get it's leverage down and meet bond covenants, BHC can complete the spinoff by issuing the remaining 80% of the BLCO shares to BHC shareholders. The drop can be due to parent company shareholders selling their spinoff shares. I wrote this article myself, and it expresses my own opinions. Generally speaking, after early price drops, spinoff stocks strengthen and offer a positive performance for several years. Please. In fact, the early bumps in the road with which any new company must contend are enough to scare off some investors. The IPO price is currently expected to be between $21 and $24 per share. If BHC can get it's leverage down and meet bond covenants, BHC can complete the spinoff by issuing the remaining 80% of the BLCO shares to BHC shareholders. Editor's note: Seeking Alpha is proud to welcome Matthew Fry as a new contributor. A wholly owned subsidiary of Bausch Health (the "Selling Shareholder") sold 35,000,000 common shares at a public offering price of $18.00 per share for aggregate gross proceeds of $630 million . View original content to download multimedia:https://www.prnewswire.com/news-releases/bausch-health-and-bausch--lomb-corporation-announce-closing-of-initial-public-offering-of-bausch--lomb-and-related-debt-transactions-301544176.html, SOURCE Bausch Health Companies Inc.; Bausch + Lomb Corporation, View original content to download multimedia: http://www.newswire.ca/en/releases/archive/May2022/10/c4801.html, https://www.prnewswire.com/news-releases/bausch-health-and-bausch--lomb-corporation-announce-closing-of-initial-public-offering-of-bausch--lomb-and-related-debt-transactions-301544176.html, http://www.newswire.ca/en/releases/archive/May2022/10/c4801.html, Man who lost wife, son in Texas mass shooting tells story, E. Jean Carroll resumes testimony in Trump rape trial after mistrial denied, Michael J. Ultimately, spinoffs tend to perform well over time. Our organic growth in the first quarter of 2022 was stable compared to the same quarter last year, despite incremental macro pressures and a challenging supply chain environment, Thomas Appio, incoming chief executive officer, said in a release. Following an earnings miss of $1.48 per share and the lower-than-expected IPO price of BLCO, the stock cratered from $16 and change on May 6 to $9.40 on May 10 and $9.72 as of May 31, giving BHC a total market cap of $3.63 billion. Bausch Health trades on the Nasdaq exchange under the ticker BHC. In both cases, the higher BLCO is trading, the better for us as BHC shareholders. These ideas will not only come from successful value investors such as Warren Buffett, Eddie Lampert, William Ackman, David Einhorn, etc, but they will also come from other sources such as flagged insider trading, spin-offs, mergers, demutulizaitons and bankruptcies. They can be. The IPO for Bausch + Lomb ( BLCO) has been priced at between $21 and $24 per share. Back to BHC Overview. Revenue for the quarter ended March 31 totalled US$1.92 billion, down from US$2.03 billion in the same period last year. LAVAL, QC and VAUGHAN, ON, May 10, 2022 /CNW/ -- Bausch + Lomb Corporation (NYSE/TSX: BLCO) ("Bausch + Lomb") and Bausch Health Companies Inc. (NYSE/TSX: BHC) ("Bausch Health") today announced the closing of the initial public offering ("IPO") of Bausch + Lomb. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. That said, BLCO stock quickly shot . It's calculated by dividing the current share price by the earnings per share (or EPS). BLCO: Exchange: NYSE: Shares (millions): 35.0: Price . Bausch + Lomb remains on track to spin off from Bausch Health, following the expiry of customary lock-ups related to the IPO . Click here to see an update on the portfolio's trades for Q4 2022. This bodes well for investors who prefer to hold on to their shares. This comes on a rather mixed day in the markets. Notably, spinoffs can present investors with challenges as well as opportunities. However, it. Price Target $22.95 ( 39.60% upside) Analyst Consensus: Buy Stock Forecasts News All Videos Press Releases Conversation Recall, that one key issue plaguing BHC is a roughly $20 billion net debt load on the balance sheet. Check out our wiki to learn more! New investors looking to take advantage of a spinoff's benefits can choose to invest in the parent, the subsidiary, or both. But, it doesn't matter since it will be free. Find out the direct holders, institutional holders and mutual fund holders for Bausch Health Companies Inc. (BHC). Eye Health (Bausch and Lomb) which is "comprised of OTC Bausch + Lomb products, with a focus on the Vision Care, Surgical, Consumer and Ophthalmology Rx products", Bausch Pharma, "a diversified pharmaceutical company which will include the Company's Salix, International Rx, dentistry, neurology, medical dermatology, and generics pharmaceutical businesses", Solta, "a global provider of aesthetic medical devices". . Spinoff investors may see share price volatility due to the company's newness and lack of financial results. Tennis Blister Treatment, The 12-month stock price forecast is 22.95, which is an increase of 39.60% from the latest price. I have no business relationship with any company whose stock is mentioned in this article. Tax Implications of a Public Company Divestiture, Parents and Spin-offs: When to Buy and When to Sell, SunEdison: A Wall Street Boom-and-Bust Story. This would value Bausch and Lomb's enterprise value at around $16 billion. Today, the company has a total enterprise value of $31 billion with a market capitalization under $9 billion. In connection with the IPO, Bausch Health entered into its previously announced Second Amendment (the "Second Amendment") in respect of its existing credit agreement (the "Existing Credit Agreement"). Nasdaq The offering is for 35M shares. I arrived at this terminal multiple by comparing BLCO to Alcon Inc. (ALC) and Hoya Corp. (7741). First, that BHC is set to distribute >100% of its equity value by way of its stake in BLCO to shareholders, secondly, that the valuation of BHC is attractive and offers a compelling risk/reward proposition even excluding its stake in BLCO, and finally, that even if the distribution of BHC's stake in BLCO to its shareholders fails to take place, the current valuation of BHC alone justifies an investment. It can also be calculated by dividing the company's Market Cap by the Net Profit. Jobs In Rosslyn Pretoria, Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. Source: OleksandrShnuryk / Shutterstock.com, Plus500. As a spinoff, the newly restructured division may exceed its past performance when part of the parent company and boost financial gains. Bausch is also hoping for a value over $20 billion since they only want to IPO "up to 20%" with hopes those proceeds will be enough to lower the company's debt. That's a 9.3% decline. After the spinoff, the rest of the Bausch and Lomb shares will be distributed and the rest of Solta Medical will be kept to help de-lever the company further. In conclusion, I would like to highlight the specific parts of this restructuring that make it so attractive. Valeant Pharmaceuticals grew through acquisitions, becoming an enormous player in the pharma space. On CNBC's "Mad Money Lightning Round," Jim Cramer said Bausch Health Companies Inc. (NYSE:BHC) is "one of the worst picks I've had. Laser 301 Battery Charger, The main risk is that BHC won't be able to meet the bond covenants due to the current economic issues. The volatile price action of a smaller, fast-growing spinoff's stock can mean the potential for lost value. Please disable your ad-blocker and refresh. Bausch Health Companies Inc's Bausch & Lomb shares are currently valued . Staff of the Federal Reserve Bank of Minneapolis often encounters agreements among the shareholders of a bank holding company and the BHC that govern the disposition of the BHC's stock. The company has worked to pay down debt, focusing on building out Bausch + Lomb in the process. The plunge of $4.04, or 24.08 per cent, to $12.74 in late-morning trading on the Toronto Stock Exchange came on the final day of its initial public offering for eye-products maker Bausch + Lomb, which debuted Friday on the TSX and New York Stock Exchange and will operate as a separate company after trading closes Tuesday. The highly anticipated Bausch + Lomb(NYSE:BLCO) initial public offering (IPO) is now a reality, and BLCO stock is now trading.
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