Novartis’ longdrawn-out efforts to buy out the 23% stake of eye care specialist Alcon seem tohave borne fruit after the Swiss major sweetened the deal to minorityshareholders.
Novartis recentlybought Nestle's remaining 52% stake for $180 per share, bringing theBasel-headquartered giant's' ownership of Alcon to 77%. However the offer of2.8 Novartis shares for each Alcon share made to minority stockholders wasrepeatedly rejected as too low by Alcon's independent directors committee.
Nowan agreement has been reached which will see the minority shareholders get up to 2.8 Novartisshares and a contingent value amount (CVA) of $168 for each outstandingshare they hold in Alcon. The total merger consideration for the minorityinterest will be in the region of $12.90 billion, bringing the total deal valueto some $51.60 billion.
Inorder to pay for the deal, Novartis is launching a share buyback programmeworth around $5 billion and use $900 million in cash. The transaction is expected tobe 3% dilutive to fully diluted earnings per share.
Daniel Vasella,Novartis’ chairman, said that “the full merger is the logical conclusion of ourinitial strategic investment in Alcon," making the firm “the global leaderin eye care, a rapidly-expanding, innovative platform based on the growingneeds of an aging population”. Chief executive Joe Jimenez added that “thegrowth synergies here are significant, as Alcon will be the eye caredevelopment engine for our best-in-class research organisation, and willleverage the Novartis market access capabilities outside the USA”.
ThomasPlaskett, chairman of the Alcon IDC who had been extremely critical ofNovartis’ methods in pushing through the acquisition, said the agreement is“the culmination of a lengthy and robust series of negotiations…that resultedin a fair value for all stakeholders”. He added that “we are delighted torecommend this negotiated transaction to the Alcon board of directors."