Investors who lost patience in Bausch Health (BHC) at below $6.00 this past summer missed out. Last week, rumors circulated that Bausch & Lomb (BLCO) is considering a buyout.
Lenders have concerns about B+L in its current state. Apollo Global Management (APO) raised its concerns about its separation plans with Bausch Health (BHC).
In 2022, BHC split out the eye care unit into BLCO stock. If B+L attracts private equity interest, it would get a substantial premium. Investors may refer to Alcon (ALC) as an example of a strong-performing eye care firm.
B+L has an attractive contact lens business. Its parent, BHC, would eagerly sell its 88% stake at a fair price. Bidders would offer an attractive proposal since BHC holders include Carl Icahn and John Paulson.
Shorts may not cover their bet against BHC stock. The short interest is 5.4%, so the bearish holders may speculate that no buyer will emerge. This increases the risk for BHC shareholders, who lost around 4% in the last year holding this stock.
Long-term investors holding BHC stock will not likely get their money back. Shares lost around 65% in the last five years. The good news is that BLCO investors hold shares that are trading near their highs not seen since last year.
