Novartis has acquired a 25-per cent stake in the world's largest and most profitable eye care company, Alcon Inc as part of a definitive agreement with Nestlé S.A. reached in April 2008 that provides the right to acquire majority ownership of the world leader in eye care in two steps.
The first step was completed on yesterday when Novartis purchased the Alcon stake from Nestlé for approximately $10.4 billion in cash. This purchase price was approximately $200 million lower than previously announced to account for the Alcon dividend paid in May 2008 for these shares to Nestlé rather than Novartis.
The optional second step provides rights for Novartis to acquire, and Nestlé to sell, the remaining 52-per cent stake held by Nestlé between January 2010 and July 2011 for a price not exceeding approximately $28 billion.
Completion of the optional second step would make Alcon a majority-owned subsidiary of Novartis, strengthening a portfolio focused on growth areas of healthcare. This portfolio include innovative medicines, generic pharmaceuticals, preventive vaccines, diagnostics and consumer health products.
In April Nestle and Novartis had disclosed that the agreement for the second stage of the transaction contains put and call option rights on the remaining Alcon shares owned by Nestle under which Novartis has a call option to buy Nestle's remaining Alcon shares at a fixed price of $181 per share.
Nestle had a put option to sell its remaining Alcon shares to Novartis at the lower of Novartis's call price of $181 per share or at a 20.5 per cent premium above the market price of Alcon shares, which will be calculated as the average price of Alcon shares during the week preceding the exercise date of the put option.(See: Novartis to acquire Nestle stake in eye care major Alcon for $11 billion)
Alcon is the world's largest and most profitable eye care company with 2007 annual sales of USD 5.6 billion, operating income of $1.9 billion and net income of $1.6 billion. Alcon offers a range of pharmaceutical, surgical and consumer eye care products used to treat diseases, disorders and other conditions of the eye.