Novartis to further strengthen its healthcare portfolio by acquiring 25% stake in Alcon from Nestlé with right to take over majority ownership of the world leader in eye care
SOURCE:
Novartis International AG
2008-04-06 22:49:00
Novartis to further strengthen its healthcare portfolio by acquiring 25% stake in Alcon from Nestlé with right to take over majority ownership of the world leader in eye care
BASEL, SWITZERLAND–( EMWNews – April 7, 2008) –
Definitive agreement with Nestlé S.A. provides Novartis the right to
acquire 77% majority ownership of Alcon in two steps
* Novartis to first acquire 25% stake from Nestlé for USD 143.18 per share for approximately USD 11 billion, closing expected in second half of 2008 * In optional second step, Novartis has exclusive right to acquire Nestlé's remaining 52% stake for a fixed price of USD 181 per share, totaling about USD 28 billion; Nestlé has right to require Novartis to buy this stake Alcon the world leader in eye care with its pharmaceutical, surgical and consumer eye care products, and a highly-rated development pipeline * Eye care market growing dynamically, driven by increase in age-related eye diseases, global expansion and novel therapies * Strong strategic fit with complementary Novartis contact lens and ophtha pharmaceutical businesses; synergies expected to be realized in due time * Definitive agreement with Nestlé S.A. provides Novartis the right to acquire 77% majority ownership of Alcon in two steps * Novartis to first acquire 25% stake from Nestlé for USD 143.18 per share for approximately USD 11 billion, closing expected in second half of 2008 * In optional second step, Novartis has exclusive right to acquire Nestlé's remaining 52% stake for a fixed price of USD 181 per share, totaling about USD 28 billion; Nestlé has right to require Novartis to buy this stake * Alcon the world leader in eye care with its pharmaceutical, surgical and consumer eye care products, and a highly-rated development pipeline * Eye care market growing dynamically, driven by increase in age-related eye diseases, global expansion and novel therapies * Strong strategic fit with complementary Novartis contact lens and ophtha pharmaceutical businesses; synergies expected to be realized in due time
Definitive agreement with Nestlé S.A. provides Novartis the right to
acquire 77% majority ownership of Alcon in two steps
* Novartis to first acquire 25% stake from Nestlé for USD 143.18 per share for approximately USD 11 billion, closing expected in second half of 2008 * In optional second step, Novartis has exclusive right to acquire Nestlé's remaining 52% stake for a fixed price of USD 181 per share, totaling about USD 28 billion; Nestlé has right to require Novartis to buy this stake Alcon the world leader in eye care with its pharmaceutical, surgical and consumer eye care products, and a highly-rated development pipeline * Eye care market growing dynamically, driven by increase in age-related eye diseases, global expansion and novel therapies * Strong strategic fit with complementary Novartis contact lens and ophtha pharmaceutical businesses; synergies expected to be realized in due time * Definitive agreement with Nestlé S.A. provides Novartis the right to acquire 77% majority ownership of Alcon in two steps * Novartis to first acquire 25% stake from Nestlé for USD 143.18 per share for approximately USD 11 billion, closing expected in second half of 2008 * In optional second step, Novartis has exclusive right to acquire Nestlé's remaining 52% stake for a fixed price of USD 181 per share, totaling about USD 28 billion; Nestlé has right to require Novartis to buy this stake * Alcon the world leader in eye care with its pharmaceutical, surgical and consumer eye care products, and a highly-rated development pipeline * Eye care market growing dynamically, driven by increase in age-related eye diseases, global expansion and novel therapies * Strong strategic fit with complementary Novartis contact lens and ophtha pharmaceutical businesses; synergies expected to be realized in due time
Basel, April 7, 2008 – Novartis has reached an agreement with Nestlé
S.A. providing the right to acquire majority ownership of Alcon Inc.
(
diversified portfolio focused on growth areas of healthcare.
The transaction’s first step to purchase a 25% stake in Alcon from
Nestlé for USD 11 billion is expected to be completed in the second
half of 2008. The second step provides rights for Novartis to
acquire, and Nestlé to sell, the remaining 52% Alcon stake held by
Nestlé between January 2010 and July 2011.
Completion of these steps would make Alcon a majority-owned
subsidiary of Novartis and further strengthen its healthcare-focused
business portfolio of innovative medicines, high-quality low-cost
generics, preventive vaccines, diagnostics and consumer health
products, taking advantage of growth opportunities and cost synergies
while mitigating risks.
The transition of Alcon’s majority ownership to Novartis would also
enhance the Group’s longer-term growth prospects with greater access
to the fast-growing eye care market, a specialty field with unmet
patient needs and annual sales of about USD 25 billion in 2007.
Alcon is the world’s largest and most profitable eye care company
with 2007 annual sales of USD 5.6 billion, operating income of USD
1.9 billion and net income of USD 1.6 billion. Alcon offers a range
of pharmaceutical, surgical and consumer eye care products used to
treat diseases, disorders and other conditions of the eye.
“This acquisition furthers our strategy of accessing high-growth
segments of the healthcare market while balancing inherent risks. The
strategic fit of Alcon and Novartis is excellent with our
complementary product portfolios and R&D synergies. Eye care will
continue to grow dynamically as there is a growing unmet medical need
driven primarily by the world’s aging population,” said Dr. Daniel
Vasella, Chairman and CEO of Novartis.
Alcon leads the world eye care market
Alcon is a high-performing and well-managed global leader in eye
care, with competitive leadership positions in all three of its
business areas:
Surgical (2007 sales: USD 2.5 billion, +13%)
Alcon provides medical devices and products for ophthalmic surgery.
The principal focus is cataract surgery where cataracts that cloud
the eye’s lens are broken up, removed and then replaced by an
artificial intraocular lens. Other products include devices for
vitreoretinal surgery involving conditions such as retinal
detachment, macular holes and vitreous hemorrhage, as well as
refractive laser surgical devices used primarily for vision
correction procedures. The surgical business area offers attractive
growth prospects given the rising incidence of eye diseases along
with the world’s aging population, medical advances and expansion in
emerging markets.
Pharmaceuticals (2007 sales: USD 2.3 billion, +15%)
Alcon offers a range of specialized medicines for many eye diseases
and conditions, including advanced treatments for glaucoma, eye
infections and eye allergies. Leading products include TRAVATAN®
solution for glaucoma, VIGAMOX® antibiotic solution for eye
infections and the eye allergy solutions PATADAY® and PATANOL®.
Strong double-digit sales growth has been achieved through market
share gains, new product launches and global expansion.
Consumer (2007 sales: USD 0.8 billion, +15%)
Alcon provides an innovative portfolio of contact lens care products,
including the OPTI-FREE® line, over-the-counter dry eye drops and
ocular vitamins. Market share gains and expansion outside the US have
supported recent growth.
Under the leadership of Cary Rayment, who has been with Alcon since
1989 and will remain as Chairman, President and CEO, Alcon has
consistently outperformed its industry peers thanks to its focus on
innovation, a broad product portfolio and strong sales force. Alcon’s
sales have risen 13% annually between 2002 and 2007, with operating
income rising at a faster 22% annual pace during the same period.
With 14,500 associates in 75 countries, Alcon’s sales are split
nearly equally between the US and rest of the world, benefiting from
both US and international expansion. Countries such as Brazil,
Mexico, Russia and China are providing important contributions to
Alcon’s growth, with sales in emerging markets advancing 21% in 2007.
Alcon’s broad and differentiated product range is underpinned by a
consistent commitment to innovation, with R&D investments of USD 564
million in 2007 that represented 10% of sales. Over the next five
years, Alcon plans to invest at least USD 3.5 billion to support the
expansion of its pipeline, which includes more than 15 projects in
late-stage development.
Founded in 1945, Alcon has maintained its focus on advancing
standards for eye care. Alcon was acquired by Nestlé in 1978, and
subsequently spun off in a partial initial public offering in 2002 on
the New York Stock Exchange. Alcon is incorporated in Hünenberg,
Switzerland, and its US operations are based in Fort Worth, Texas.
Transaction terms with Nestlé
Novartis and Nestlé have reached an agreement for a two-step
transaction providing a path for the transfer and smooth transition
to Novartis of Nestlé’s ownership of 77% of Alcon’s outstanding
shares, which totaled 298.1 million as of April 4, 2008. These
transactions will require regulatory approvals.
In the first step, Novartis will acquire a 25% stake in Alcon for
about USD 11 billion through the purchase of approximately 74 million
shares held by Nestlé. This reflects a per-share price of USD 143.18,
which is Alcon’s volume-weighted average share price between January
7, 2008, and April 4, 2008. Alcon’s closing share price was USD
148.44 on April 4, the last trading day before the signing of this
agreement.
In the second step, Novartis has the right to acquire Nestlé’s
remaining 52% majority stake in Alcon between January 1, 2010, and
July 31, 2011, for a fixed price of USD 181 per share, or
approximately USD 28 billion. During this period, Nestlé has the
right to require Novartis to buy its remaining stake at a 20.5%
premium to Alcon’s share price at the time of exercise, but not
exceeding USD 181 per share. Based on Alcon’s closing share price on
April 4, 2008, the combined premium would be a maximum of 13% to
complete the two steps. Novartis has no obligation to purchase the
remaining 23% of shares held by Alcon minority shareholders at any
time.
Novartis intends to finance the purchase of the 25% Alcon stake in
the first step from internal cash reserves and external short-term
financing, with borrowing needs currently estimated at USD 5.5
billion. Financing for the second step would be supported by the
Group’s ongoing cash generation and further external borrowing.
Potential strategic benefits and synergies
Following completion of the transaction’s first step, Novartis will
have a representative on Alcon’s Board of Directors. Alcon and
Novartis will remain separate and independent companies.
If majority ownership is transferred from Nestlé during the second
step, Novartis and Alcon will identify the best way to realize
synergies from combining their complementary eye-related businesses.
Potential benefits could include creating a broader portfolio of eye
care products, in particular with CIBA Vision’s contact lens business
and Novartis medicines such as Lucentis® for severe eye diseases not
addressed by Alcon’s portfolio. Other opportunities include R&D
activities and an even more aggressive expansion in fast-growing
regions, particularly Asia, where Novartis has long-standing
operations. In addition, the relationships of Novartis with
healthcare payors and strong health economics activities could
contribute to Alcon’s marketing programs.
On the other side, Alcon would help limit risks within the Novartis
portfolio based on its diversified payor structure with reduced risks
of price regulation, leadership in a specialty healthcare area, and
greater access to businesses with discretionary consumer spending.
Note to investors
Novartis will hold a conference call with financial analysts to
discuss this announcement on Monday, April 7, 2008, at 14:00 Central
European Time. A simultaneous webcast of the call for interested
investors and others, as well as additional information on this
transaction, may be accessed by visiting the Novartis website at
Disclaimer
This release contains certain forward-looking statements relating to
the proposed acquisition by Novartis of a majority stake in Alcon and
to the Novartis Group’s and Alcon’s respective businesses. Such
forward-looking statements are not historical facts and can generally
be identified by the use of forward-looking terminology such as
“expected”, “will”, “estimated”, “would”, “could”, “potential”,
“opportunities”, “pipeline”, or similar expressions, or by express or
implied discussions regarding potential future sales or earnings of
Novartis or Alcon or pending regulatory approvals; or by discussions
of strategy, plans, expectations or intentions or potential
synergies, strategic benefits or opportunities that may result from
the proposed acquisition. Such forward-looking statements reflect the
current plans, expectations, objectives, intentions or views of
Novartis with respect to future events and involve known and unknown
risks, uncertainties and other factors that may cause actual results
to be materially different from any future results, performance or
achievements expressed or implied by such statements. In particular,
there can be no guarantee that the proposed transaction will be
completed in the expected form or within the expected time frame or
at all. Nor can there be any guarantee that Novartis or Alcon, or any
of their divisions or business units, will achieve any particular
future financial results or future growth rates or that Novartis and
Alcon will be able to realize any of the potential synergies,
strategic benefits or opportunities as a result of the proposed
transaction. Among other things, Novartis’ expectations could be
affected by unexpected regulatory actions or delays or government
regulation generally as well as other risks and factors referred to
in Novartis AG’s and Alcon Inc.’s current Forms 20-F on file with the
US Securities and Exchange Commission. Novartis is providing the
information in this release as of this date and does not undertake
any obligation to update any forward-looking statements as a result
of new information, future events or otherwise.
About Novartis
Novartis provides healthcare solutions that address the evolving
needs of patients and societies. Focused on growth areas in
healthcare, Novartis offers a diversified portfolio to best meet
these needs: innovative medicines, cost-saving generic
pharmaceuticals, preventive vaccines and diagnostic tools, and
consumer health products. Novartis is the only company with leading
positions in these areas. In 2007, the Group’s continuing operations
(excluding divestments in 2007) achieved net sales of USD 38.1
billion and net income of USD 6.5 billion. Approximately USD 6.4
billion was invested in R&D activities throughout the Group.
Headquartered in Basel, Switzerland, Novartis Group companies employ
approximately 98,200 full-time associates and operate in over 140
countries around the world. For more information, please visit
Novartis Investor Relations
Ruth Metzler-Arnold +41 61 324 9980 Katharina Ambuehl +41 61 324 5316 North America: Pierre-Michel Bringer +41 61 324 1065 Richard Jarvis +1 212 830 2433 John Gilardi +41 61 324 3018 Jill Pozarek +1 212 830 2445 Jason Hannon +41 61 324 2152 Edwin Valeriano +1 212 830 2456 Thomas Hungerbuehler +41 61 324 8425 Isabella Zinck +41 61 324 4353 Central phone no: +41 61 324 7944 Fax: +41 61 324 8444 Fax: +1 212 830 2405 E-mail: E-mail: [email protected] [email protected]
Novartis Media Relations
Beatrix Benz Michael Schiendorfer Novartis Global Media Relations Novartis Swiss Public Relations +41 61 324 7999 (direct) +41 61 324 9577 (direct) +41 79 618 7748 (mobile) +41 79 834 6418 (mobile) [email protected] [email protected] E-mail: [email protected]
Copyright © Hugin AS 2008. All rights reserved.