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Alcon to acquire WaveLight


Alcon Inc. is combining with WaveLight AG, taking over the Erlangen, German-based company through a "friendly takeover." The €10 per share in cash offer (approximate equivalent $13.82 US per share) will provide a 34% premium on the 1-month volume-weighted average stock exchange price and a 45% premium on the 3-month volume-weighted average stock exchange price of WaveLight shares during the respective months prior to the announcement.

Key Points

Fort Worth, TX-Alcon Inc. said it has entered into a business combination agreement with WaveLight AG and intends to acquire the Erlangen, Germany-based company through what it is calling a "friendly takeover."

Alcon said it will offer €10 per share in cash (approximate equivalent $13.82 US per share) for all issued shares of WaveLight. This offer will provide a 34% premium on the 1-month volume-weighted average stock exchange price and a 45% premium on the 3-month volume-weighted average stock exchange price of WaveLight shares during the respective months prior to the announcement, according to statements issued by both companies.

An integration plan will be developed to capitalize on the two companies' capabilities, the organizations said. WaveLight's excimer laser (Allegretto) for refractive surgery offers one of the fastest ablation speeds available, according to the company, with a worldwide installed base of more than 800 units.

Doug MacHatton, Alcon's vice president for investor relations, said several surgeons began swapping the newer platform for the previous-generation platform after a recent recall regarding two algorithms for myopia with and without astigmatism for customized LASIK procedures (CustomCornea) with the upgraded excimer laser system (LADAR-6000). According to the FDA, the algorithms caused corneal abnormalities or "central islands" and decreased visual acuity in patients. The recall was completed in May ("Two algorithms corrected on Alcon excimer laser system," Ophthalmology Times, July 1, 2007).

"We had some challenges with the . . . platform, and we feel this [business combination agreement] is a good addition to the platform we have today," MacHatton said. "It allows us to move forward within that channel for cata-ract and refractive surgeons and deliver a product they're looking for: a predictable workhorse laser. We think the [Allegretto laser] fits those needs very well."

In addition, the business combination agreement may help move WaveLight's laser system into markets it has not been able to reach, MacHatton said. Alcon, which claims about 12% of the market, hopes to move into "the low teens" with the acquisition, according to MacHatton.

"When you take the technology [benefits] ... represented by the [WaveLight] laser and add them to ... other capabilities that we have, along with our commercial capabilities-the reach that we have, the ability to serve and support on a global basis-all of that combines to make a more effective refractive business for us and for WaveLight," MacHatton said. "With the combination of the two [businesses], we'll be able to deliver on what [ophthalmologists'] needs are, more so than we can individually."

WaveLight said it offers both its proprietary wavefront-optimized and wavefront-guided treatments for the same per-procedure fee to surgeons in the United States but does not currently charge per-procedure fees overseas. The company sells its laser and diagnostic systems within the United States; WaveLight also sells its own line of IOLs outside the United States, according to Luca M. Sergio, WaveLight's vice president, marketing.

"For clinicians, the [Allegretto laser] offers outstanding, unparalleled clinical outcomes," Sergio said, adding that its low enhancement rate allows surgeons to treat more patients. "It's a wonderful clinical platform."

Under terms of the agreement, Max Reindl, WaveLight AG's chief executive officer, will be a member of an operating committee with Alcon's management to develop the integration plan. Also, he will remain chairman of the executive committee at WaveLight.

MacHatton said integration details would be finalized once the deal is complete but Alcon would continue to support its excimer laser platform to meet surgeons' needs.

"We're going to work with our customers to give them the best solution they need," MacHatton said.

WaveLight's executive committee has recommended that its shareholders accept the offer, according to Sergio.

"For our customers, it's a very good thing," Sergio said. "We anticipate that the technology will thrive within the larger framework of Alcon."

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