Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of specialty pharmaceutical company Valeant Pharmaceuticals (NYSE:BHC) spiked higher by as much as 17% following a report from The Wall Street Journal that indicates that Valeant may be close to purchasing privately held eye care products maker Bausch & Lomb.
So what: With the article citing unnamed sources, the deal -- which would value Bausch & Lomb at $9 billion -- could be announced as early as next week, although the parties involved noted it could fall apart just as easily. The current owners of Bausch & Lomb, Warburg Pincus, have been looking to part ways with their investment over the past year that they paid just $4.5 billion for in 2007.
Now what: Given a rapidly aging baby boomer population, eye product maker Bausch & Lomb could be the perfect spark for Valeant to grow over the long run. Investors certainly seem to like the deal, but I'd remain cautious about making a move one way or the other until a buyout is announced or talks break apart. There's usually little sense in chasing rumors!
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