SANTA ANA, CA and SANTA CLARA, CA—Shares of VISX jumped nearly 35% on Nov. 10 following the announcement that Advanced Medical Optics (AMO), a global provider of ophthalmic surgical devices and eye care products, has acquired VISX, the leading provider of laser vision correction services, for $1.27 billion (29.0 million shares of AMO stock and $184 million in cash). VISX stock rose $6.26 to $24.36, while shares of Advanced Medical Optics fell $3.64 to $38.80, an 8.6% drop.
Under terms of the definitive merger agreement, VISX stockholders will receive 0.552 shares of AMO stock and $3.50 in cash for every share of VISX common stock they own, or a total value of $26.52 per share of VISX common stock, based on the closing price of AMO's common stock on November 8, 2004.
The combined company will retain the Advanced Medical Optics name and be headquartered in Santa Ana. The VISX facility in Santa Clara will remain intact, with the laser group's R&D, sales, service, and manufacturing activities continuing to operate there. Upon close of the transaction, Liz Davila, VISX chairman and CEO, will join AMO's board of directors, increasing to eight the number of directors for the combined company. Doug Post, VISX president and chief operating officer, will become president of AMO's Americas region. According to Post, who came to VISX in 1992 with the acquisition of Questek, which was then providing excimer lasers to VISX (Questek's nonmedical division was sold to Lambda Physik in 1993), the merger makes strategic sense on a number of levels.
"When you look at field of ophthalmology, the two companies are so well aligned. There is no overlap of products," he said. "AMO offers the lifecycle of vision care, with the exception of the laser. And VISX, while successful, is really a one-product type of company. For example, if you look at presbyopia, a market with so much potential, and you look at the solutions available, we have a laser-based solution, but companies like AMO are developing intraocular lenses and other types of solutions. And in the shorter term, AMO has the Amadeus microkeratome for LASIK, which is something we are not participating in. We have the laser, but now we can bundle the entire procedure." In addition, AMO has a very large international presence, while VISX derives about 85% of its revenue from the US market, which accounts for about 50% of the world market for vision correction.
VISX was founded in the mid-1980s by Charles Munnerlyn, Terry Clapham, and ophthalmologist Steven Trokel. Munnerlyn and Clapham had previously worked at Coherent Medical and Cooper Lasersonics, where they developed ophthalmic lasers and diagnostic instruments. But it was Trokel who first theorized that shaping the surface of the eye with the excimer laser might have the same effect as corrective lenses. Munnerlyn derived a mathematical formula for removing corneal tissue to form the desired refractive corneal surface; it took another 10 years, however, for the company to gain its first FDA clearance. Today VISX holds more than 200 patents worldwide and has licensed its vision-correction technology to Alcon, Bausch & Lomb, LaserSight, Nidek, Schwind, Zeiss-Meditec, and WaveLight Technologies.
AMO focuses on developing a broad suite of innovative technologies and devices to address a wide range of eye disorders. Products in the ophthalmic surgical line include foldable intraocular lenses, phacoemulsification systems, viscoelastics and related products used in cataract and refractive surgery, and microkeratomes used in LASIK procedures for refractive error correction.
"With its proprietary laser systems and custom ablation technologies, skilled service organization and long-standing reputation for reliability, VISX is the manufacturer of choice in laser vision correction," said Jim Mazzo, AMO president and CEO. "Adding their robust product platform to our existing refractive business represents a bold step forward to achieve one of AMO's core strategic goals to build a leading refractive surgical business."