Shares of Bausch + Lomb Corp. leapt into record territory Friday, after the eye-health products company confirmed it was buying the “dry eye” treatment Xiidra from Novartis AG in a deal valued at $2.5 billion.
Under terms of the deal, Bausch + Lomb
BLCO,
will make an upfront payment of $1.75 billion in cash, and could make milestone payments of up to $750 million based on sales and commercialization thresholds. The company said it plans to finance the cash portion of the deal with new debt.
Bausch + Lomb’s stock powered up 8.3% in morning trading. That puts the stock on track to close above the current record closing price of $20.00, which was reached on its first day of trading on May 6, 2022.
The stock was also headed for the biggest one-day percentage gain since it rose a record 9.1% on Nov. 10, 2022.
Meanwhile, Novarits’ U.S.-listed shares
NVS,
NOVN,
gained 1.0%.
Bausch + Lomb said the acquisition of Xiidra (lifitegrast ophthalmic solution) 5%, an eye drop used to treat dry-eye disease, will complement its existing dry eye business, which includes eye and contact lens drops.
“The deal is also expected to accelerate margin expansion through a larger mix of pharmaceutical products in our portfolio, provide strong and immediate earnings accretion and presents a clear path to deleverage, making it financially compelling,” said Chief Executive Brent Saunders.
The deal is expected to close by the end of 2023.
The Wall Street Journal had reported earlier that a deal would be announced.
Bausch’s stock has run up 33.9% year to date, while the Health Care Select Sector SPDR exchange-traded fund
XLV,
has slipped 2.6% and the S&P 500
SPX,
has gained 15.7%.
