Novartis to acquire Alcon

By Nick Taylor

- Last updated on GMT

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Novartis to acquire Alcon
Novartis intends to acquire the remaining 75 per cent of Alcon for $39.3bn (€27.3bn), adding to the shares it bought in April 2008 and giving the big pharma control of the ophthalmic specialist.

The purchase will strengthen Novartis’ position in the eye care sector, which Daniel Vasella, CEO of the Switzerland-based pharma, believes will experience “dynamic growth due to the increasing patient needs of an aging population​”.

Age demographics of western countries mean these are the major markets for many eye care treatments but rising standards of living, and subsequent improvements in life expectancy, are predicted to drive growth in emerging regions.

Novartis has long standing operations in some of the countries, in particular throughout Asia, and by utilising this infrastructure it should be equipped to expand Alcon’s geographic reach.

Vasella explained that by completing the purchase of Alcon Novartis will “grow [its] global market presence​” and eliminate ownership uncertainties for employees and shareholders.

Diversification

Following completion of the deal Novartis claims its portfolio will cover 70 per cent of the global vision care sector, spanning pharmaceuticals, surgical products, contact lenses and over-the-counter (OTC) brands.

This diversification into new business sectors should help insulate Novartis from challenges specific to its pharmaceutical operations.

Furthermore, the addition of Alcon’s expertise and infrastructure will “strengthen innovation power by combining R&D efforts​”, according to Vasella.

Completing the deal

Novartis acquired a 25 per cent stake in Alcon from Nestle in April 2008. This deal included the option to purchase a further 52 per cent for $28.1bn at a later date and Novartis has now chosen to exercise this right.

Following completion of the second phase of the deal Novartis will own 77 per cent of Alcon. The remaining shares trade on the New York Stock Exchange and Novartis is offering to buy these for $11.2bn.

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