Novartis AG agreed to buy a 25 percent stake in Nestle SA’s Alcon Inc for US$11 billion and said it may acquire the rest to become the world’s biggest maker of eyecare products.
Novartis, Switzerland’s second-largest pharmaceuticals company, will pay US$143.18 a share for Vevey, Switzerland-based Nestle’s 25 percent holding, and has an option to buy a further 52 percent from the food company for US$28 billion.
Alcon, based in Hunenberg, Switzerland, rose 2.5 percent to US$148.44 in New York Stock Exchange composite trading on Friday.
Buying Alcon would add US$5.6 billion in sales and gives Novartis the Opti-Free contact lens treatment, the Travatan glaucoma medicine and the Infiniti line of cataract surgery products.
The drugmaker needs new sources of revenue as generic competition eats into sales of its best-selling medicines. Nestle will use the funds to cut debt.
“Blue-chip pharmas have a lot of money and are desperate for new growth opportunities,” said Denise Anderson, an analyst at Landsbanki Kepler in Zurich. “It’s not cheap.”
Novartis, which has lost 16 percent this year, gained 0.5 percent, to SF52.65 (US$51.92) as of 9:01am in Zurich trading. Nestle rose SF14.5, or 2.8 percent, to SF526.
The purchase comes on top of the US$13 billion Novartis spent on acquisitions including generic-drug makers Hexal AG and Eon Labs Inc in 2005 and the US$5.7 billion acquisition of vaccine maker Chiron Corp in 2006.
“This acquisition furthers our strategy of accessing high-growth segments of the healthcare market while balancing inherent risks,” Novartis chief executive Daniel Vasella said in the statement.
“The strategic fit of Alcon and Novartis is excellent. Eye care will continue to grow dynamically as there is a growing unmet medical need driven primarily by the world’s aging population,” he said.
Nestle had repeatedly said since August that it no longer considered its Alcon stake as a strategic investment.
“Alcon is strong enough to stand on its own,” Nestle chairman Peter Brabeck said on Feb. 21. “Alcon doesn’t need Nestle any more, and Nestle doesn’t need any more Alcon.”
Nestle bought Alcon in 1977 as it sought to expand in the US to offset investments in other markets it considered to be riskier, the Swiss company’s Web site said. Alcon was Nestle’s second acquisition outside the food industry. The first was the purchase of a stake in L’Oreal SA, the world’s largest cosmetics maker, in 1974.
The food company sold a minority stake in Alcon in an initial public offering in 2002 at US$33 a share. The stock has almost quintupled since that stock sale, and Alcon’s profits have tripled since then.
Novartis may also acquire a 52 percent stake at a fixed price of US$181 a share between January 2010 and July 2011. Nestle can also require Novartis to buy the stake.
Alcon had sales of US$5.6 billion last year, operating income of US$1.9 billion and net income of US$1.6 billion.
The sale should boost this year’s earnings per share, Nestle said in a statement on its Web site. The bottler of Perrier water will 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.” Nestle expects to conclude the sale of the stake “before autumn.”
LONG FLIGHT: The jets would be flown by US pilots, with Taiwanese copilots in the two-seat F-16D variant to help familiarize them with the aircraft, the source said The US is expected to fly 10 Lockheed Martin F-16C/D Block 70/72 jets to Taiwan over the coming months to fulfill a long-awaited order of 66 aircraft, a defense official said yesterday. Word that the first batch of the jets would be delivered soon was welcome news to Taiwan, which has become concerned about delays in the delivery of US arms amid rising military tensions with China. Speaking on condition of anonymity, the official said the initial tranche of the nation’s F-16s are rolling off assembly lines in the US and would be flown under their own power to Taiwan by way
OBJECTS AT SEA: Satellites with synthetic-aperture radar could aid in the detection of small Chinese boats attempting to illegally enter Taiwan, the space agency head said Taiwan aims to send the nation’s first low Earth orbit (LEO) satellite into space in 2027, while the first Formosat-8 and Formosat-9 spacecraft are to be launched in October and 2028 respectively, the National Science and Technology Council said yesterday. The council laid out its space development plan in a report reviewed by members of the legislature’s Education and Culture Committee. Six LEO satellites would be produced in the initial phase, with the first one, the B5G-1A, scheduled to be launched in 2027, the council said in the report. Regarding the second satellite, the B5G-1B, the government plans to work with private contractors
‘OF COURSE A COUNTRY’: The president outlined that Taiwan has all the necessary features of a nation, including citizens, land, government and sovereignty President William Lai (賴清德) discussed the meaning of “nation” during a speech in New Taipei City last night, emphasizing that Taiwan is a country as he condemned China’s misinterpretation of UN Resolution 2758. The speech was the first in a series of 10 that Lai is scheduled to give across Taiwan. It is the responsibility of Taiwanese citizens to stand united to defend their national sovereignty, democracy, liberty, way of life and the future of the next generation, Lai said. This is the most important legacy the people of this era could pass on to future generations, he said. Lai went on to discuss
MISSION: The Indo-Pacific region is ‘the priority theater,’ where the task of deterrence extends across the entire region, including Taiwan, the US Pacific Fleet commander said The US Navy’s “mission of deterrence” in the Indo-Pacific theater applies to Taiwan, Pacific Fleet Commander Admiral Stephen Koehler told the South China Sea Conference on Tuesday. The conference, organized by the Center for Strategic and International Studies (CSIS), is an international platform for senior officials and experts from countries with security interests in the region. “The Pacific Fleet’s mission is to deter aggression across the Western Pacific, together with our allies and partners, and to prevail in combat if necessary, Koehler said in the event’s keynote speech. “That mission of deterrence applies regionwide — including the South China Sea and Taiwan,” he
RSS