Deal includes a $28.1 billion buyout of Nestlé’s stake and an $11.2 billion merger.

Novartis is proposing a complete purchase of eyecare company Alcon at some $39.3 billion. This excludes the $10.4 billion Novartis spent in April 2008 to purchase a 25% stake in Alcon from Nestlé.

Novartis’ acquisition of the remaining 75% in Alcon would be effected in two stages. Firstly, Novartis has exercised its option to purchase the 52% stake in Alcon that is still owned by Nestlé for $28.1 billion in cash, or about $180 per Alcon share; Nestlé originally acquired Alcon in 1977 for $ 280 million. This share acquisition, which is still subject to regulatory clearance, will give Novartis a 77% interest in Alcon.

Secondly, Novartis has proposed a direct all-share merger of Alcon into Novartis through an offer of 2.8 Novartis shares for each outstanding Alcon Share. This equates to another $11.2 billion, or $153 per Alcon share, for the remaining 23% of publicly traded Alcon stock.

Alcon says that it is still reviewing Novartis’ merger proposal but does note that the company’s $153 per share valuation of the remaining 23% of Alcon stock is 15% lower than the weighted-average call price of $180 per share Novartis is paying Nestlé for its stake in the company.

Novartis claims the proposed acquisition of Alcon would strengthen its ophthalmology portfolio and provide greater access to the global eyecare sector. If the takeover is completed, Alcon would be established as a new Novartis eyecare division. 

“This is the right time to simplify Alcon’s ownership to eliminate uncertainties for employees and shareholders,” according to Daniel Vasella, M.D., Novartis’ chairman and CEO. “It will also allow us to strengthen innovation power by combining R&D efforts and grow our global market presence thanks to our complementary product portfolios.”

Alcon made total sales of some $6.3 billion in 2008, of which $2.6 billion was recorded by its ophthalmology pharmaceuticals division. The company’s ophthalmology surgical division made sales of $2.9 billion. It’s consumer division, which encompasses contact lens care products, OTC eye drops, and ocular vitamins, achieved sales of $0.8 million.

Novartis reported $0.5 billion in net sales of selected ophthalmic pharmaceuticals in 2008 and claims it provides a range of complementary medicines used to treat eye diseases that are not addressed by Alcon’s portfolio. The company’s Ciba Vision eyecare and contact lens business generated net sales of $1.7 billion in 2008.

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