Revealed in a recent Q1 13F filing, activist Carl Icahn boosted his stake to 34.1 million shares in Bausch Health Companies (BHC) to become the largest shareholder ahead of its spin-off, notes Jim Osman, editor of The Edge Weekly — and a participant in The MoneyShow Orlando Conference on June 10-12. Learn more here.

Given BHC’s high leverage has kept a number of investors away, we believe a sale or IPO-spinoff — or even a SPAC listing — may be in the works separate from a normal spin-off.

• Potential SpinCo Sale:

Rumors suggested that a sale of its Bausch & Lomb Business (SpinCo) were being explored, with a range of $20- $30 billion.

While not common, we’ve seen cases in the past where companies announce a spinoff but then sell the segment. With activist Carl Icahn building an 8% stake after BHC’s spinoff announcement, we believe this and other options are being explored;

• Discount:

Leading eye care business is trading at a significant discount: Bausch & Lomb (SpinCo) will position itself as a vision & eye care business similar to peers.

Currently, these peers command an average FY22E EV/EBITDA multiple of 23.8x currently versus Bausch & Lomb’s 13.3x (at a 56% discount to the peer average);

• Near-Term Catalyst:

BHC will still be looking to sell other non-core assets to hit their $4 billion-$5 billion mark (currently at $2.6 billion) before the spin-off so a shorter term catalyst. We believe that BHC may also look to sell its skin care/aesthetics business, Solta, which could fetch for $1.9 billion.

Overall, the potential upside (Pre-Spin) is 47%, with a spin-off date estimated to be in the third quarter of  2021.

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