Novartis to buy Nestle’s Alcon stakes for $39 bln

Novartis AG has agreed to buy Nestle AG’s 77% stake in U.S.
company Alcon for $39 billion to boost its eye care business, the Swiss
drugmaker said on Monday.

Novartis will acquire a first, 25% stake in Alcon for $11 bln
and has an option to buy Nestle’s remaining 52% for a fixed price of $28 bln
between January 2010 and July 2011.

Novartis said it would finance the purchase of the first
stake in Alcon from its cash reserves and external short-term financing.

It would finance the possible purchase of the second stake
from cash and further borrowing.

Nestle said the transaction would have a positive effect on
its 2008 earnings per share and proceeds from the sale would be used to reduce
debt.

The price of the first stake is a 4% discount to Alcon’s
closing price on Friday.

Novartis would pay a 22% premium from Alcon’s closing price
if it went ahead with the purchase of Nestle’s remaining shares.

The combined premium would be a maximum of 13% to complete the two
steps, Novartis said in a statement.