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Novartis Eyes Full, $50 billion Alcon Takeover

Novartis on Jan 4 announced it was exercising its option to purchase Nestlé's remaining 52 percent stake in eye-care group Alcon for $28.1 billion. The Swiss Big Pharma will finish up paying almost $50 billion for full control of the group, given its controversial attempt to buy out the minority Alcon shareholders for a further $11.2 billion.

It came as no surprise when on January 4 Novartis AG announced it was exercising its option to purchase Nestlé's remaining 52% stake in eye-care group Alcon Inc. for $28.1 billion, or $180 per share. The Swiss Big Pharma had as good as committed to do so back in April 2008, when it bought the first tranche of 25% from Nestlé SA for $10.4 billion, or $143 per share. [See Deal] At the time, Novartis agreed to a "put" clause allowing Nestlé to compel it to buy the additional shares between early-2010 and mid-2011 at a price not exceeding $181 per share, or roughly $28 billion.

Given that Alcon's shares fell to less than half of their April 2008 value at the end of that year, Novartis could have bought Alcon for far cheaper by waiting and doing a single purchase. But Nestlé was calling the shots on deal structure, and possibly the timing, too. As Novartis chairman and CEO Dan Vasella, MD, pointed out at the time, the two-step structure was to accommodate Nestlé's desire not to sell all in one go

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