Nestle has agreed to sell 74 million shares of its Alcon common stock to Novartis in a cash transaction valued at $143.18 per share. Once the agreement is finalized, Novartis will own a 25% stake in Alcon, an eye care company with sales of approximately $5.6 billion in 2007. Nestlé will remain Alcon’s majority shareholder with approximately 52% of Alcon’s outstanding shares.
The agreement also contains put-and-call option rights on the remaining Alcon shares owned by Nestlé, which commence on January 1, 2010 and expire on July 31, 2011. As outlined by the two parties, these rights grant (1) Novartis a call option to buy Nestlé’s remaining Alcon shares at a fixed price of $181 per share and (2) Nestlé a put option to sell its remaining Alcon shares to Novartis at the lower of Novartis’s call price of $181 per share or at a 20.5% premium above the market price of Alcon shares. These will be calculated as the average price of Alcon shares during the week preceding the exercise date of the put option.
In addition, the Alcon board of directors will be expanded from eight to ten members, with one of the additional members designated by Nestlé and one designated by Novartis.
"Today's decision reflects Nestlé's commitment to ensure a strategically sound and financially attractive solution for Nestlé and Alcon. Nestlé has been able to take a further step in realizing shareholder value from its long-term Alcon investment. Alcon benefits from having a new minority shareholder whose activities are closely aligned with its own business," said Peter Brabeck-Letmathe, chairman and CEO of Nestlé.