Alcon to Strengthen Refractive Business With WaveLight Purchase

Alcon Inc. on Monday said it has agreed to buy WaveLight AG of Germany, a maker of refractive laser and diagnostic systems, in a move to bolster the eye-care company’s refractive surgery capabilities. “We view the acquisition favorably and believe that, among other things, it helps close the technology gap held by Advanced Medical Optics Inc. in the refractive surgery channel,” Jefferies & Co. analyst Peter Bye wrote in a research note. WaveLight’s Allegretto laser system has an installed base of more than 800 units around the world, he noted, “making it a good fit for Alcon’s global commercial infrastructure.” Citigroup analyst Andrew Swanson said the agreement adds good technology to the industry’s top distribution platform. “In terms of market dynamics, the Alcon/WaveLight combination hardly strips competition out of the marketplace; rather, the deal puts good laser technology in the hands of the ophthalmology company with the best distribution network globally,” he wrote in a note to clients. “As such, we view the deal as an incremental negative for the other players in the space.” Under terms of the agreement, Alcon will offer 10 euros ($13.78) a share in cash for WaveLight shares, a 34% premium to their one-month weighted average price and a 45% premium to the weighted average price over the past three months that analysts say values the company at more than $90 million. WaveLight’s executive committee is backing the deal and plans to recommend it to shareholders. Shares of Alcon, which is majority owned by Nestle SA , edged up 39 cents to end the session at $143.38. Shares of WaveLight ended with a more than 16% gain in overseas trading. “This acquisition will provide additional clinical solutions and laser technology to better support our cataract and refractive customers,” Alcon Chief Executive Cary Rayment said in a statement. Surgical sales, which include the cataract and refractive divisions, accounted for 45% of the $4.9 billion in total revenue Alcon reported for the full-year 2006 period. “We look forward to welcoming the WaveLight team and believe the combination of the Allegretto laser with our premium lenses, the AcrySof ReStor and AcrySof Toric intraocular lenses, and our future launch of the AcrySof phakic lens in Europe enhances Alcon’s product portfolio in the cataract/refractive surgeon channel,” Rayment said. Alcon is scheduled to report second-quarter results on July 25. Analysts polled by Thomson Financial are looking for the company to post earnings of $1.43 a share on revenue of $1.46 billion, on average. For the full-year period, the company said it expects per-share earnings of $5.08 to $5.18, or $5.15 to $5.25 on an adjusted basis, on revenue of $5.4 billion to $5.48 billion. SOURCE: Market Watch by Dow Jones