Bausch & Lomb, a Rochester, NY-based eye care company, said it will withdraw its offer and does not intend to raise the bid.

Des Plaines, Ill-based Wesley Jessen was valued at about $758 million under CIBA's offer, based on its 19.678 million diluted shares and options, compared with a value of about $699 million under Bausch & Lomb's bid.Atlanta-based CIBA Vision also would assume about $30 million of Wesley Jessen's net debt.

The CIBA transaction would create the world's second-largest contact lens company behind Johnson & Johnson with reported proforma sales of $1.4 billion and a combined workforce of 8,900 people.

Meanwhile, Wesley Jessen said it terminated its proposed $625 million merger with San Francisco-based Ocular Sciences Inc and paid Ocular a $25 million break-up fee. Ocular Sciences was not immediately available for comment.With the Wesley Jessen acquisition, CIBA Vision would dominate the market for colour contact lenses in the US, expanding on its already strong presence in that business, said David Giroux, an analyst at T Rowe Price, which holds a 9.1 per cent stake in Wesley Jessen.

He said CIBA may have to divest some of those businesses for the deal to win regulatory approval. "Wesley and CIBA basically have all the market in the US for colour," he said.

But Wesley Jessen's colour lenses, which have been popular in the US, will now have better access to international markets with CIBA Vision.

"Wesley Jessen brings to CIBA Vision an exciting range of products that complement our existing brands," CIBA Vision chief executive Glen Bradley said.

"Additionally, CIBA Vision will be able to greatly expand the global reach of Wesley Jessen's product lines."

However, Giroux said he was surprised CIBA Vision did not bid for Ocular Sciences, a leader in the two-week disposable contact lens market, noting that CIBA Vision doesn't really have a position in that business.

Ocular may now become a prime target for a takeover with the $25 million from the break-up fee and other cash on the balance sheet, he said. Ocular could be attractive to a Financial buyer; Alcon, a unit of Nestle SA; or CooperVision, Cooper Cos Inc's contact lens business.

"I tend to think the big loser in this whole thing is Bausch & Lomb," Giroux said. "I think they could have gone higher." And now Bausch & Lomb is "stuck in a market where the two-week disposable market isn't growing," he said.

The CIBA offer came one day before the expiration of Bausch & Lomb's hostile tender offer, which was essentially just a poll of investor sentiment because of Wesley Jessen's poison pill takeover provision.

The poison pill would have made it prohibitively expensive for Bausch & Lomb to acquire more than 15 per cent of Wesley Jessen's stock.

"We considered the acquisition of Wesley Jessen to be strategically appropriate for the company, but only at a price that is attractive to the Bausch & Lomb shareholders, Bausch & Lomb chairman and chief executive William Carpenter said.

Bausch & Lomb also had nominated three members for election to Wesley Jessen's eight-member board at its annual meeting.

Wesley Jessen postponed indefinitely its annual shareholder meeting, which had been scheduled for June 23. CIBA Vision said it will begin within five business days a cash tender offer for all outstanding shares of Wesley Jessen common stock.

-- (Reuters)The CIBA Vision offer is subject to 51 per cent of the Wesley Jessen shares being tendered and other regulatory and and customary conditions. The agreement was unanimously approved by Wesley Jessen's board of directors.CIBA expects to complete the transaction in the third quarter. (Reuters)