Zurich: Novartis AG has agreed to buy Nestle AG’s 77% stake in US company Alcon for $39 billion to boost its eye care business, the Swiss drugmaker said on Monday.
Novartis will acquire a first, 25% stake in Alcon for $11 billion and has an option to buy Nestle’s remaining 52% for a fixed price of $28 billion between January 2010 and July 2011.
Novartis said it would finance the purchase of the first stake in Alcon from its cash reserves and external short-term financing.
It would finance the possible purchase of the second stake from cash and further borrowing.
Nestle said the transaction would have a positive effect on its 2008 earnings per share and proceeds from the sale would be used to reduce debt.
The price of the first stake is a 4% discount to Alcon’s closing price on Friday.
Novartis would pay a 22% premium from Alcon’s closing price if it went ahead with the purchase of Nestle’s remaining shares.
The combined premium would be a maximum of 13% to complete the two steps, Novartis said in a statement.