Novartis offers $39.3 billion to buy Alcon including major Nestle stake

Switzerland's Novartis aims to buy the rest of US eye care group Alcon for a total $39.3 billion (Dh144bn), including a majority stake from Nestle, to diversify away from prescription drugs.

Novartis said yesterday it would exercise an option to acquire a 52 per cent stake in Alcon from Nestle, the world's largest food group, for $28.1bn, boosting its holding in Alcon to 77 per cent. The Swiss drugmaker bought an initial 25 per cent stake in 2008.

Novartis, which had been widely expected to snap up the stake, also plans to buy out the 23 per cent held by Alcon minority shareholders for $11.2bn, ending uncertainty as to whether or not it would go for full control.

Novartis and rival drugmakers such as GlaxoSmithKline and Sanofi-Aventis are pushing into areas such as consumer healthcare and generics as they face the biggest loss of patent protection in history.

Jeffrey Holford, an analyst at stockbroker Jefferies in London, said Novartis needed full control of Alcon to achieve its planned synergies and would likely end up paying more.

The fixed exchange ratio proposal of 2.80 Novartis shares for each remaining Alcon share is less generous to minorities, amounting to $153 per share compared with the $180 agreed with Nestle.

Novartis Chief Executive Daniel Vasella said he was confident Alcon minority shareholders would accept the offer.

Novartis said it expected to complete the deal in the second half of the year, funding it from available cash resources and up to $16bn of external debt financing.

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