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Warburg to Make Nearly 3x its Money on Bausch & Lomb Sale

Warburg Pincus looks like it will nearly triple its investment once it sells Bausch & Lomb to Valeant Pharmaceuticals.

Valeant, the Canadian drugmaker, agreed yesterday to buy the provider of eye care products from Warburg in an $8.7 billion cash deal. About $4.5 billion will go to the Warburg-led investor group, according to a company statement. Warburg, which owns 87% of Bausch, will likely receive about $3.9 billion.

New York-based Warburg acquired Bausch & Lomb in 2007 for about $4.5 billion, including $830 million in debt. Warburg, along with Bank of America, Citi, Credit Suisse and J.P. Morgan Ventures, provided about $1.9 billion equity for the deal, according to an August 2007 SEC filing. Press reports say Warburg invested $1.7 billion of the equity.

Bausch paid out a $772 million dividend to its equity sponsors in March, peHUB previously reported. Warburg likely received about $671 million of the dividend.

Including proceeds from the dividend, the PE firm will likely make 2.5x to 3x its money on Bausch, a source says.

Warburg was pursuing a dual-track process for Bausch. The Rochester, N.Y.-based eye care company was up for sale earlier this year and seeking bids of $10 billion. After potential buyers reportedly resisted price tag, Bausch registered for an IPO in March.

Warburg chose to sell Bausch because a sale would allow the PE firm to exit its investment more quickly than an IPO, the New York Times reported.

The investment in Bausch came from Warburg’s ninth fund, which raised $8 billion in 2005. The PE firm raised $15 billion for its 10th fund in 2007 and $11.2 billion for its 11th fund earlier this month.

Officials for Warburg declined comment for this story.

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