Novartis to buy 25% minority stake in Alcon from Nestlé

April 7, 2008

Nestlé S.A. and Novartis AG announced that they have reached an agreement that would provide Novartis the right to acquire 77% majority ownership of Alcon Inc. in two steps. First, Nestlé will sell 74 million of its shares of Alcon Inc. common stock to Novartis in a cash transaction at a price of $143.18 per share for approximately $11 billion. The deal would give Novartis a minority stake in Alcon of approximately 25% of Alcon's outstanding shares, while Nestlé would remain Alcon's majority shareholder with approximately 52% of Alcon's outstanding shares. The transaction's first step is expected to be complete in the second half of 2008, the companies said in prepared statements.

Nestlé S.A. and Novartis AG announced that they have reached an agreement that would provide Novartis the right to acquire 77% majority ownership of Alcon Inc. in two steps. First, Nestlé will sell 74 million of its shares of Alcon Inc. common stock to Novartis in a cash transaction at a price of $143.18 per share for approximately $11 billion. The deal would give Novartis a minority stake in Alcon of approximately 25% of Alcon's outstanding shares, while Nestlé would remain Alcon's majority shareholder with approximately 52% of Alcon's outstanding shares. The transaction's first step is expected to be complete in the second half of 2008, the companies said in prepared statements.

An optional second step provides rights for Novartis to acquire, and Nestlé to sell, the remaining 52% of Alcon stake held by Nestlé for a fixed price of $181 per share, totaling about $28 billion, between January 2010 and July 2011.

Completion of these steps would make Alcon a majority-owned subsidiary of Novartis.

The agreement also provides for the expansion of the Alcon board of directors from eight to ten members, with one of the additional members designated by Nestlé and one designated by Novartis. The nominees for these additional board seats are James Singh, who is currently Nestlé's executive vice president and chief financial officer, and Daniel Vasella, MD, chairman and chief executive officer of Novartis. Shareholders will vote on whether to expand the Alcon board and to elect these nominees at Alcon's upcoming annual general meeting May 6 in Zug, Switzerland. Alcon distributed proxy materials to its shareholders on April 2, and it will distribute a new proxy form to shareholders incorporating these additional items.

"This acquisition furthers our strategy of accessing high-growth segments of the health-care market while balancing inherent risks," Dr. Vasella said. "The strategic fit of Alcon and Novartis is excellent with our complementary product portfolios and R&D synergies."

"I welcome Novartis as a minority investor, and I believe the agreement validates Alcon's leadership and bright future in the attractive and growing eye-care market," said Cary Rayment, Alcon chairman, president, and chief executive officer. "It is also a testament to all of our employees who have been responsible for making Alcon the global leader in the eye-care market."

The purchase and sale transaction is subject to regulatory approvals, the companies said.