Novartis Alcon deal approved by regulators

Novartis buys Alcon majority

A deal that saw Swiss drugmaker Novartis buy a minority stake in Alcon has received approval from EU regulators making it possible for the company to take ‘full control' of the US eyecare.

Originally Novartis held a 25 percent stake in the company, but has aimed to buy another 52 percent from Nestlé. While its offer is dependant on share price moves, Novartis believes that its acquisition with allow it to divest several products in the ophthalmological, pharmaceutical and consumer vision care sectors in the EU, reducing the company's dependency on prescription drugs.

Diversifying

In an official press release, Novartis said that the merger would "strengthen its presence in the growing eye care sector."

The company also added that:

• After purchasing a 25 percent stake in April 2008 for US$143 per share, Novartis exercises its call option to buy an additional 52 percent stake from Nestlé for US$180 per share, or US$28.1 billion
• Total cost for 77 percent majority stake of US$38.5 billion, or US$168 per share
• Proposal for subsequent all-share direct merger of Alcon into Novartis to avoid uncertainty and speculation on Alcon's future in interest of all stakeholders
• Fixed exchange ratio proposal of 2.80 Novartis shares for each remaining Alcon share, a 12 percent premium to unaffected Alcon share price of US$137
• Merger proposal subject to closing of Nestlé transaction, implied cost for 23 percent minority stake of US$11.2 billion, or US$153 per Alcon share

Commenting on the acquisition, the European Commission said in a statement: "In light of the commitments, the Commission concluded that the transaction would not significantly impede effective competition in the European economic area or any substantial part of it."

Novartis isn't the only one attempting to diversify its product line in the face of losing drug patent protection over the next few years. Pharmaceutical giants GlaxoSmithKline and Sanofi-Aventis have all been making similar deals in recent months.

Sanofi-Aventis in particular has been pursuing a takeover of Genzyme in order to gain its high-cost treatments for rare genetic disorders.

Likewise, Alcon is currently the top global company in opthalmic surgery products and also makes contact lens products and medicines for eye diseases such as glaucoma.

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