Novartis pays out $12.90 billion to clinch Alcon deal

Novartis’ long drawn-out efforts to buy out eye care specialist Alcon seem to have borne fruit after the Swiss major sweetened the deal to minority shareholders.

Novartis recently bought Nestle’s remaining 52% stake for $180 per share, bringing the Basel-headquartered giant’s’ ownership of Alcon to 77%. However the offer of 2.8 Novartis shares for each Alcon share made to minority stockholders was repeatedly rejected as too low by Alcon’s independent directors committee.

Now an agreement has been reached which will see the minority shareholders get up to 2.8 Novartis shares and a contingent value amount (CVA) of $168 for each outstanding share they hold in Alcon. The total merger consideration for the minority interest will be in the region of $12.90 billion, bringing the total deal value to some $51.60 billion.

In order to pay for the deal, Novartis is launching a share buyback programme worth around $5 billion and use $900 million in cash. The transaction is expected to be 3% dilutive to fully diluted earnings per share.

Daniel Vasella, Novartis’ chairman, said that “the full merger is the logical conclusion of our initial strategic investment in Alcon,” making the firm “the global leader in eye care, a rapidly-expanding, innovative platform based on the growing needs of an aging population”. Chief executive Joe Jimenez added that “the growth synergies here are significant, as Alcon will be the eye care development engine for our best-in-class research organisation, and will leverage the Novartis market access capabilities outside the USA”.

Thomas Plaskett, chairman of the Alcon IDC who had been extremely critical of Novartis’ methods in pushing through the acquisition, said the agreement is “the culmination of a lengthy and robust series of negotiations…that resulted in a fair value for all stakeholders”. He added that “we are delighted to recommend this negotiated transaction to the Alcon board of directors.”