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Novartis to acquire piece of Nestle’s Alcon

This article was originally published in The Tan Sheet

Executive Summary

Nestle will sell 74 million shares of its Alcon eye-care product firm to Novartis for $143.18 per share, the Swiss firms announce April 7. After the deal closes, Novartis will own approximately 25 percent of Alcon's outstanding shares, leaving Nestle as Alcon's majority shareholder with 52 percent of outstanding shares, Novartis says. The agreement also grants Novartis a call option to buy Nestle's remaining shares at $181 per share, according to the firms. Additionally, Nestle will have a put option to sell its remaining Alcon shares at "the lower of Novartis' call price of $181 per share" or "20.5 percent premium above the market price of Alcon shares," which will be calculated based on the average share price of Alcon during the week before the put option. Alcon's consumer products include the OPTI-FREE contact lens solution brand and Systane eye lubricating drops; the firm posted $5.6 billion in sales in 2007...

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Novartis closes its acquisition of a 25 percent stake in Alcon as part of an agreement with Nestle announced in April. Nestle said previously it would sell 74 million shares of its Alcon eye-care product firm to Novartis at $143.18 a share (1"The Tan Sheet" April 14, 2008, In Brief). Novartis purchased the stake in Alcon for approximately $10.4 billion in cash - $200 million less than previously announced, to account for the "Alcon dividend paid in May 2008 for these shares to Nestle rather than Novartis," the Switzerland-based firm says. There is also an optional second step, which would allow Novartis to acquire the remaining 52 percent stake held by Nestle between January 2010 and July 2011 for a price not exceeding $28 billion. Novartis says completion of the optional second step would make Alcon a "majority-owned subsidiary of Novartis, strengthening a portfolio focused on growth areas of health care"...

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