Novartis buying Nestle's chunk in Alcon

Posted Apr 7th 2008 8:33AM by Zack Miller
Filed under: International Markets, Deals, Novartis AG ADS (NVS)

Just announced this morning, global drug manufacturer Novartis (NYSE: NVS) is offering to buy a minority stake in the world's largest eye-care firm, Alcon (NYSE: ACL), by buying the stake from food conglomerate Nestle (OTC: NSRGY).

Essentially, the deal is to happen in two parts. The first stage appears to be a purchase of a 25% stake in Alcon for around $11 billion. This purchase comes with an option to purchase an additional 52% stake for about $28 billion.

Novartis will pay $143.18 a share for the purchase of the 25% stake. The option to purchase the 52% stake will come at a fixed share price of $181 and can come between 2010 and 2011.

From a statement on Nestle's website, the food maker plans to use the proceeds to reduce debt and the cash will also "support opportunities for profitable growth in line with the group's nutrition, health and wellness orientation.''

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

Tags: acl, alcon, deal, inthenews, MA, nestle, novartis, nsrgy, nvs