Bausch & Lomb Inc. was slogging forward after a difficult year—the company had been embroiled in a lengthy accounting investigation involving some of its foreign subsidiaries since the end of 2005 and in early 2006 it was compelled to recall its most profitable product—contact lens solution ReNu with MoistureLoc. In mid-may 2007 Bausch & Lomb was wrestling with a 3% decrease in annual sales, 344 product liability lawsuits, and an overhanging intellectual property case that could affect its fastest growing contact lens line, PureVision, when up galloped white knight Warburg Pincus LLC, with a $4.5 billion offer to take the ophthalmic company private (including the assumption of $830 million in debt.) [See Deal] The offer was 30 times projected 2007 cash flow, according to Standard & Poor’s, and 26 times projected 2007 earnings per share.
Bausch & Lomb’s directors were unanimous in their approval of the offer, which, in relieving the company of the pressures...