Novartis, the parent company of CIBA Vision, is to acquire a 77 percent stake in Alcon from Nestlé in a two-stage deal for a total of around $39 billion. In the second half of this year, Novartis plans to buy an initial stake of 25 percent in Alcon for around $11 billion. The Swiss company expects to purchase another 52 percent stake from Nestlé for around $28 billion between January 2010 and July 2011.
The other 23 percent of Alcon is going to remain publicly traded. Novartis' chairman and chief executive officer, Daniel Vasella, told analysts that the company is not planning to buy these shares. He added that he did not expect any anti-trust hurdles to the Alcon deal, which is subject to regulatory approvals.
The agreement will provide the possibility for Alcon's board of directors to expand from eight to 10 members; one of the new members would be designated by Nestlé and the other by Novartis. The nominees for the two board seats are James Singh, Nestlé's executive vice president and chief financial officer, and Vasella himself. Alcon's shareholders will vote on whether or not to increase its board and elect these nominees at the company's annual general meeting on May 6 in Zug, Switzerland.
Cary Rayment, Alcon's chairman, president and chief executive officer, said that he welcomed Novartis as a minority investor and believed the agreement validated Alcon's leadership and bright future in the attractive and growing eye care market.
Alcon, which made sales of $5.6 billion and a net income of $1.6 billion last year, sells surgical devices for eye surgery, medicines for eye diseases such as glaucoma, and contact-lens solutions and eye drops. Novartis is expected to capitalize on Alcon's experience in the eye care market as it continues to develop its CIBA Vision contact lens operations and through the sale of Lucentis, its own expensive drug which has proven its effectiveness in treating age-related macular degeneration.
Novartis reported a 9 percent increase in net sales for the first quarter of 2008, and credited in part its consumer health segment, which grew by 14 percent to $1.46 billion over the year prior. The company said that this unit was helped by a strong performance of CIBA Vision, which saw growth because of its new products Dailies and AirOptix as well as complete supplies after shortages in 2007.