Novartis completes merger with Alcon

13 April 2011

Novartis has completed the merger of Alcon, Inc. (Alcon; NYSE: ACL) into Novartis. The completion of the merger follows the approval of both Alcon and Novartis shareholders last week.

Alcon, Inc. had sales of approximately $7.2 billion in 2010. The company has been producing ophthalmic products for 65 years. It researches, develops, manufactures and markets pharmaceuticals, surgical equipment and devices, contacts lens solutions and other vision care products that treat diseases, disorders and other conditions of the eye. Alcon operates in 75 countries and sells products in 180 markets.

Alcon will be a new division in Novartis and the second biggest in the company after Pharmaceuticals. The division will be headed by Kevin Buehler, former chief executive of Alcon.

Novartis Chief Executive Joseph Jimenez said: "Novartis strategy is based on high-growth, science-based segments of healthcare, and Alcon is a great fit with our portfolio. Together, Novartis and Alcon will hold competitive positions in highly complementary product areas and create an even stronger global leader in the dynamic eye care sector. And in eye care, just as in other Novartis growth platforms, innovation is fundamental to success. Access to ophthalmology research programs at the Novartis Institutes for BioMedical Research will provide a powerful drug discovery engine for the new division."

The number of Novartis shares required in connection with the merger are 165 million shares instead of the initially expected 215 million shares. The amount of shares required for the merger was reduced through the purchase of 16.1 million Alcon shares in the open market since the announcement of the merger agreement in December 2010.

The 165 million shares are composed of 108 million newly issued shares from the authorized capital increase approved by the Novartis Board of Directors and 57 million shares already held as treasury shares. Under the terms of the agreement, Alcon shareholders will receive 2.9228 Novartis shares (which includes the dividend adjustment) and US$8.20 in cash for each share of Alcon, for a total consideration of US$168 per share.

Novartis says that a full update on expected synergies, one-time costs and progress of integration process resulting from the merger will be provided with the Novartis quarterly earnings update on April 19, 2011.


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