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news.Novartis has purchased a 25% stake in eye care giant Alcon from Nestle for $11 billion, and has negotiated an option to buy Nestle's remaining 52% share for a fixed price of $28 billion. If the remaining step of the acquisition goes ahead, Novartis will be the majority owner of Alcon, and will be the world's largest producer of eye care products.
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Novartis, Switzerland’s second largest pharmaceuticals company, will pay $143.18 a share for Nestle’s 25% holding, and has a window to complete the optional second step of its majority takeover bid between January 2010 and July 2011. It will finance the first stage of the transaction from its cash reserves and external short-term financing.
Buying the majority share in Alcon would provide $5.6 billion in annual sales to Novartis, and the patents to the firm’s leading contact lens treatments, medicines and surgical devices. The drug maker is seeking new sources of revenue to combat sales losses due to generic competition for its leading medicines.
Nestle, which will use the funds to cut debt, has said that the sale will not change its growth strategy. A spokesperson claimed that the company plans to spend CHF2 billion on acquisitions every year, including 2008.
The purchase comes on top of the $13 billion that Novartis spent on acquisitions in 2005, including generic drug makers Hexal and Eon Labsand, and the $5.7 billion acquisition of vaccine maker Chiron in 2006.
Daniel Vasella, Novartis’s chief executive, said: “The strategic fit of Alcon and Novartis is excellent. Eye care will continue to grow dynamically as there is a growing unmet medical need driven primarily by the world’s aging population.”