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Novartis recently announced on its official website that it has reached a deal with Nestlé to acquire 77% of Alcon, the company’s eye care business. This strategic move marks a significant step in Novartis’s long-term plan to strengthen its presence in the ophthalmic sector.
According to the statement, Novartis plans to complete the purchase of an additional 25% stake in Alcon during the second half of 2008, with an investment of around $11 billion. The remaining 52% of shares will be acquired between January 2010 and July 2011, bringing the total funding for the acquisition to $28 billion. This transaction is expected to solidify Novartis’s position as a leading player in the global eye care market.
Alcon, which was originally acquired by Nestlé in 1977, is currently the world’s largest and most profitable eye care company. In 2007, Alcon generated annual sales of $5.6 billion, highlighting its strong market performance. Prior to this acquisition, Novartis already had a presence in ophthalmic products and contact lenses. Novartis CEO, Wie Si Le, emphasized that this deal aligns with the company’s goal to expand into the eye care industry and drive long-term growth.
Nestlé also welcomed the agreement, stating that the sale of Alcon’s equity would significantly boost its earnings per share in 2008 and enhance the profitability of its nutrition and health divisions. This transaction reflects a strategic shift for Nestlé, allowing it to focus more on its core businesses while capitalizing on the value of its eye care assets.
This isn’t the first time Novartis and Nestlé have engaged in such a deal. In 2007, Novartis sold its pharmaceutical nutrition division to Nestlé for $2.5 billion. At the time, Novartis stated that the sale would allow the company to concentrate more on its core pharmaceutical and vaccine operations, improving financial stability and strategic flexibility. Analysts at the time believed that this move would help Novartis streamline its operations and focus on high-growth areas.
With this latest acquisition, both companies are reinforcing their respective strategies—Novartis expanding into eye care, and Nestlé optimizing its portfolio by divesting non-core assets. The deal is expected to bring mutual benefits and reshape the competitive landscape in the healthcare sector.