Novartis Acts To Acquire Alcon

Novartis intends to acquire full ownership of Alcon by completing a prior agreement with Nestlé to purchase a 77% stake in the company. After a stock deal to acquire the remaining 23% of Alcon, Novartis will have spent $49.7 billion to take over the ophthalmic products firm.

The Swiss drug giant spent $10.4 billion in 2008 for a 25% stake in Alcon. It is exercising an option under that agreement to purchase Nestlé's remaining 52% stake in Alcon for $28.1 billion, or $180 per share. Novartis will then spend $11.2 billion for the remaining publicly-owned shares of the company.

Nestlé purchased its stake in Alcon, which was based in Fort Worth, Texas, in 1977 for $280 million. In 2008, Alcon had $6.3 billion in sales divided between surgical products (46%), pharmaceuticals (41%), and consumer products such as eye drops (13%).

The deal is the most recent move by a large pharmaceutical firm to supplement income from traditional prescription drugs by acquiring over-the-counter, generic, or specialty healthcare businesses. Last month, for example, Sanofi-Aventis announced plans to acquire Chattem, a U.S.-based consumer healthcare firm, for $1.9 billion.

"The addition of Alcon will strategically strengthen our healthcare portfolio and our position in eye care, a sector with dynamic growth due to the increasing patient needs of an aging population," says Novartis CEO Daniel Vasella.

Vasella adds that the acquisition will combine the research and marketing assets of Alcon with Novartis' Ciba Vision eye care business, which specializes in contact lenses. Combined, Novartis estimates that the companies' businesses cover 70% of the global vision care market.

Upon successful completion of the deal, Alcon will operate as a division of Novartis. The total eye care business at Novartis will have annual sales of about $8.5 billion.