08/26/2010 0 Comments

HUENENBERG, Switzerland—In an announcement earlier today, Novartis AG (NYSE: NVS) and Nestle S.A. said that they have completed the purchase and sale of approximately 156 million shares of Alcon, Inc. (NYSE: ACL) for US$28.3 billion in cash.

The transaction was consummated based on an agreement between Nestle and Novartis that was executed on April 6, 2008. With the completion of this transaction, Novartis is now Alcon's majority shareholder and controls approximately 77 percent of Alcon's outstanding shares. Effective immediately, the five Nestle-designated members of the Alcon board of directors have tendered their resignations and the Aug. 16, 2010 election of the five Novartis-designated directors is deemed effective.

"I would like to thank Nestle for their outstanding contributions and support of Alcon for more than 30 years, which has been an important part of making Alcon the global leader in ophthalmology," said Kevin Buehler, Alcon's president and CEO. "We now welcome Novartis as our new majority owner and look forward to working with them to further enhance Alcon's business model, provide opportunities for future growth and deliver benefits to customers and patients around the world."

The transaction announced by Nestle and Novartis does not affect the remaining 23 percent of Alcon's shares that trade publicly on the New York Stock Exchange. On Jan. 4, 2010, Novartis proposed a merger of the two companies under Swiss merger law at a fixed exchange rate of 2.8 Novartis shares for each Alcon share which has a current value of approximately US$142. The Independent Director Committee (IDC) of Alcon's board of directors reviewed this proposal and rejected it on Jan. 20, 2010 based on inadequate value.

"While Novartis is now our majority owner, Alcon remains an independent, publicly-listed company, and it is important to maintain good corporate governance around related-party transactions," added Buehler. "Alcon will continue to abide by the Organizational Regulations, which require the IDC to review and approve all related-party transactions, including the Novartis proposed merger."

In its own announcement, the Alcon Independent Director Committee (IDC) noted the closing of Novartis' acquisition of Nestle's remaining stake in Alcon, Inc. and said it does not impact the IDC's position with respect to Novartis' merger proposal to minority shareholders. Thomas G. Plaskett, chairman of the IDC, said, "We look forward to negotiating a deal that affords fair value to Alcon's minority shareholders. An agreed transaction is in the best interests of all stakeholders and is clearly preferable to protracted litigation, which would delay critical steps in the integration process."

Alcon, Inc. had sales of approximately $6.5 billion in 2009.

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