Novartis reaches agreement with Alcon shareholders

[December 15, 2010]  GENEVA (AP) -- Swiss pharmaceutical company Novartis AG said Wednesday it has reached a deal with minority shareholders of Alcon Inc. to complete its $51 billion takeover of the eye care company, the largest such deal in Swiss corporate history.

Novartis said the cost of acquiring the remaining minority stake in Alcon of 23 percent will be $12.9 billion -- or about $1 billion dollars more than it had originally offered.

Analysts at Zuercher Kantonalbank said the deal dispelled any uncertainty the market might feel toward Novartis and would help the company make best use of Alcon's broad portfolio of eye care medicines, contact lens solutions and ophthalmic surgical products.

Shares in Novartis rose 3.7 percent to 55.60 Swiss francs ($57.90) on the Zurich exchange.

The Basel-based company will pay Alcon minority shareholders the equivalent of $168 per share, an increase of 9 percent on its first offer of $154 per share. The payment will be made up of 2.8 Novartis shares plus the difference in cash. If the 2.8 Novartis shares are worth more than $168, the company will reduce the number of shares it transfers.

Alcon minority shareholders had rejected Novartis' previous offers and threatened legal action, claiming they would have been paid less per share than the eye care company's main shareholder, Nestle SA.

The sweetened offer of $168 per share is equivalent to the average price Novartis paid Nestle for its 77 percent stake, which it earlier acquired in two stages starting in 2008.

Novartis said the combination of Alcon and its own eye care division would produce annual cost savings of $300 million.

"With this step Novartis takes full ownership, becoming the global leader in eye care, a rapidly expanding, innovative platform based on the growing needs of an aging population," Novartis chairman Daniel Vasella said in a statement.

Alcon, which is incorporated in Switzerland but has its U.S. headquarters in Fort Worth, Texas, recorded annual sales of $6.5 billion and a net profit of $2 billion last year. It has over 15,500 employees in 75 countries.

The new eye care division, which will be led by current Alcon chief executive Kevin Buehler, will incorporate Novartis' CIBA Vision and range or ophthalmic medicines.

Novartis said it expects the merger to be completed on April 1, 2011.

[Associated Press]

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