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Novartis recently announced on its official website that it has reached a deal with Nestlé to acquire 77% of Alcon, its eye care subsidiary. This significant move marks a major step in Novartis’s strategy to strengthen its presence in the ophthalmic market.
According to the statement, Novartis plans to complete the purchase of an additional 25% stake in Alcon by the second half of 2008, at a cost of approximately $11 billion. The remaining 52% will be acquired between January 2010 and July 2011, bringing the total investment to around $28 billion. This acquisition is expected to enhance Novartis’s position in the global eye care industry and support its long-term growth objectives.
Alcon, which was originally acquired by Nestlé in 1977, is currently the world’s leading and most profitable eye care company. In 2007, it generated annual sales of $5.6 billion. Before this deal, Novartis already had a range of products in ophthalmology and contact lenses. Novartis CEO Wie Si Le emphasized that the acquisition will help the company better enter and expand within the eye care sector.
Nestlé also expressed confidence in the transaction, stating that the sale of Alcon’s shares would significantly boost its 2008 earnings per share and improve the profitability of its nutrition and health business segments.
This is not 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 focus more on its core pharmaceutical and vaccine businesses, improving its financial stability and strategic flexibility.
Analysts believed that by divesting non-core assets, Novartis could concentrate on its main operations and drive sustainable growth in the competitive pharmaceutical industry. With this latest acquisition, the two companies are further deepening their collaboration, reflecting a broader trend of strategic realignment in the healthcare sector.