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COOPERVISION SALES ARE EXPECTED TO APPROACH $800 MIL. BY 1989

Executive Summary

COOPERVISION SALES ARE EXPECTED TO APPROACH $800 MIL. BY 1989, according to figures in Nestle's $500 mil. cash offer registration for the purchase of the ophthalmic product mfr. With FY 1984 (ending Oct. 31) volume predicted to be $263.8 mil. (up 32.8%), CooperVision's sales for the following five years are projected to grow at rates of 36.7%, 26.8%, 23.8%, 20.4% and 17.5%. Net earnings for CooperVision should grow from $28.3 mil. in 1984 to $177.9 mil. in 1989, according to the registration, increasing 84.0%, 45.3%, 43.3%, 30.1% and 26.3% per year. Operating margins would be 15.0%, 19.7%, 22.1%, 24.5%, 25.6% and 26.6%, respectively. Nestle is funding its $515 mil. acquisition (including purchase fees) primarily with an intercorporation loan from subsidiary Maggi Enterprises to Alcon. The $515 mil., according to the regislation, "is intended to be furnished by Maggi Enterprises, an affiliate of Nestle, to Alcon . . . in the form of (1) a 22-year term loan in the principal amount of approximately $460 mil., unsecured and bearing interest payable quarterly at the rate announced from time to time by Citibank N.A. as its prime rate . . . and (b) an unsecured advance of approximately $55 mil. on the purchase price payable by Nestle or an affiliate of Nestle." The Nestle/Alcon deal with CooperVision was brewing for just over two months before CooperVision announced April 23 that discussions were being held ("The Pink Sheet" April 30, T&G-6). CooperVision made the initial contact "on Feb. 21, 1984," the registration explains, "[CooperVision's] financial advisor [Morgan Stanley] contacted Nestle with a view toward assessing Nestle's interest in a potential arrangement and . . . indicated that [CooperVision] might consider being acquired provided that the purchase price represented a very substantial premium over the market value. "Thereafter, Nestle communicated to [CooperVision's] financial advisor its interest in pursuing further discussions and engaged First Boston as financial advisor to Nestle and Alcon . . . On April 24, 1984, Nestle and [CooperVision] reached an agreement, whereupon [CooperVision's] board of directors unanimously approved the terms of the offer" of $25 per share for the 20.13 mil. shares of CooperVision outstanding. Nestle has agreed to pay First Boston $1 mil. for its services, "a fee of $250,000 for financial advisory services [and] an additional fee of $750,000 upon acquisition," the registration states. If the transaction is completed, CooperVisioin "has agreed to pay Morgan Stanley a fee, against which any advisory fee would be credited, of approximately $2.6 mil." In a related matter, Alcon announced May 11 that it has received a "request from FTC, pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, for additional information relating to the proposed acquisition" of Cooper Vision and stated that "the requested information would be furnished promptly to the FTC."
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