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Novartis to acquire 25% minority stake in Alcon from Nestlé
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HUENENBERG, Switzerland — Nestlé S.A. and Novartis AG have reached an agreement under which Novartis will acquire 74 million shares of Alcon common stock in a cash transaction at a price of $143.18 per share, Alcon and Novartis announced.
The agreement is valued at approximately $11 billion and is expected to be completed in the second half of this year. Once consummated, Novartis would own a minority stake in Alcon of approximately 25% of Alcon's outstanding shares. Nestlé would remain Alcon's majority shareholder, retaining approximately 52% of Alcon's outstanding shares.
However, the agreement contains "put and call" option rights on the remaining Alcon shares owned by Nestlé, which commence on January 1, 2010 and expire on July 31, 2011.
These rights grant Novartis a call option to buy Nestlé's remaining Alcon shares at a fixed price of $181 per share. It also grants Nestlé a put option to sell its remaining Alcon shares to Novartis at the lower of Novartis' call price of $181 per share or at a 20.5% premium above the market price of Alcon shares, which will be calculated based on Alcon's average share price during the week before the exercise date of the put option, according to a press release from Alcon.
Should Novartis acquire Nestlé's remaining 52% stake in Alcon, Alcon would become a majority-owned subsidiary of Novartis.
The agreement also provides for the expansion of Alcon's board of directors from eight to ten members, with one of the additional members designated by Nestlé and one designated by Novartis.
Shareholders will vote on whether to expand the Alcon board at Alcon's upcoming annual general meeting in May.