updated 11/10/2004 9:03:49 AM ET 2004-11-10T14:03:49

Advanced Medical Optics Inc., a maker of eye care products and optical surgical equipment, is acquiring laser eye surgery company VISX Inc. in a cash and stock deal valued at $1.27 billion.

The merger, announced Tuesday, was approved by the boards of both companies.

The deal is "an exciting combination of talent, technology, customer knowledge and growth potential," said Jim Mazzo, president and chief executive of Santa Ana-based Advanced Medical Optics.

Under terms of the agreement, VISX stockholders will receive 0.552 shares of AMO stock and $3.50 in cash for each share of VISX common stock, or a total value of $26.52 per share of VISX, based on the closing price of AMO shares on Monday.

The total consideration will be approximately 29 million shares of AMO stock and $184 million in cash.

AMO said it expects the combination will save $10 million to $15 million in costs beginning next year.

AMO expects the exchange of shares to be tax-free to VISX stockholders. Upon completion of the transaction, AMO's stockholders will own approximately 58.5 percent of the combined company and VISX's stockholders will own approximately 41.5 percent.

The combined company will retain the Advanced Medical Optics name and be headquartered in Santa Ana.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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