This week pharmaceutical giant Novartis AG has reached an agreement to buy the pending shares (23%) of Alcon, an eye care product manufacturer and a subsidiary of Nestle. With the agreement, Novartis has won its long-lasting legal battle to take over the Alcon. The deal is expected to close in the first half of next year for the full ownership.
This is not the first deal happened between both the companies. Novartis bought into Alcon in three phases over a period of two years, first purchasing Nestle’s stake in Alcon, paying $143 a piece in 2008, then purchasing shares at $180 per piece for rest of the food company’s interest. The average share price of the two transactions was $168, the same deal it is now offering minority shareholders.
To get the complete stake in the company Novartis had been offering the directors of Alcon $137 share for the remainder of the company, or $11.2 billion but the offer was refused by the directors for getting paid less than the $168 per share. After months of discussions, Novartis finally added $ 1.7 billion to the offer for the minority shareholders, to $12.9 billion. Altogether, the cost for Novartis comes to $51.6 billion, including a cash supplement of up to $900 million and the company currently values of $49.9 billion market cap.
style="color: #000000;">“Alcon is a great strategic fit for Novartis, as a science-based leader in a high growth segment of healthcare. The growth synergies are significant, as Alcon will be the development engine for our best in class research organization in eye care and will leverage the Novartis market access capabilities outside the United States,” said Joseph Jimenez, chief executive officer of Novartis. “I am very pleased that we were able to come to this agreement and will be able to provide Alcon employees the full benefits of being part of the Novartis Group.”
Kevin Buehler, president and chief executive of Alcon, will lead the division when it is merged with Novartis.
After 11-months of dispute, Novartis has finally got victory to take over the Alcon and enjoy the 70% of the eye-care market.