This is just pure speculation, but I'm wondering if B&L is Pershing Square Tontine Holdings target that they have been working on since November. Some thoughts below:
- "Iconic" Business per Ackman comments - check (it's been around for over 100 years)
- Per Ackman's comments, "a lot of complexity and solving an issue" - check (B&L is being spun out of Bausch Health with proceeds being used to repay debt; BHC needs to internally organize to stand-up B&L on its own; BHC; B&L would otherwise be spun out via IPO).
- Timing (working on it since November) - check (fits well with timing on BHC disclosures on spinning out B&L; BHC is rumoured to have solicited offers for B&L which were due mid April so they have had time to evaluate; B&L would be ready for a spin-out by Q3 per management guidance)
-Strong Management that Ackman likes - check (he hired Joe Papa, B&L CEO, at Valeant/BHC)
-Size Parameters - check (if B&L valued on a consistent basis with peers, PSTH would own ~30% of B&L with $5bn and PS pro-rata ownership would be about ~5%; if upsized to $6bn PS would own c. 10%; that ownership stake and proceeds are consistent with what BHC needs to de-lever effectively)
B&L also meets all their other criteria (FCF +, durable growth business etc). Although Ackman has a tainted history with Pharma (Valeant), the eyecare business is far more stable and less susceptible to regulatory issues than true pharma businesses (which is why they trade at 23x+ EBITDA - lots of concumer product exposure) and he does have some history with it. Issue is Icahn is on the flip side of the transaction and they have a history - but really it's a "win-win" because it saves BHC the IPO discount for spinning out B&L and gives them greater liquidity than an IPO would out of the gate (could probably only list ~15-20% out of the gate). PSTH can probably take a view that they are getting it at a value that is impacted by COVID related performance.
Curious as to views/thoughts from others...
Note: I am long BHC and glta who are in a similar position.
PS - am surprised this board is not more active