Novartis CFO says no plans to acquire more Alcon shares

This article is provided to FT.com readers by dealReporter—a news service focused on providing insightful intelligence on event driven situations to investors. www.dealreporter.com

--------------------------------------------------------------------------------------------------------

Novartis (NYSE:NVS) has no plans to acquire Nestle’s remaining shares of Alcon (NYSE:ACL), said Meryl Zausner, CFO of Novartis Corporation and executive committee member.

Despite a call option to purchase Nestle’s remaining Alcon common shares, Zausner told this news service that come January 2010 - when the options can commence - it will really be up to Nestle to exercise its put options to sell its remaining common shares.

These options expire on 31 July 2011.

Nestle remains Alcon’s majority shareholder with approximately 52% of Alcon’s issued capital and Novartis owns a minority stake in Alcon equal to approximately 24.85% of Alcon’s issued capital.

The Basel pharma giant’s call option is at a fixed price of USD 181 per share. During this time, Nestle has the option to sell its remaining Alcon stake at a 20% premium of the average share price during the week before the sale, not exceeding USD 181 per share.

The executive said that minority shareholders believe they are going to get bought out, but this was not in Novartis’ plans. She added of the minority share holders’ stakes “we can accomplish our goal with our without that.”

An analyst familiar with the situation said it could not be ruled out that the second stage of the Novartis/Nestle options deal will take place over a long period of time. He did note however that Alcon’s stock has risen recently, although it is still down significantly from the original purchase price, and this is most certainly a huge factor in the decision process.

A spokesperson for Novartis, when asked about the minority shareholders, stated, “Our deal is between Nestle and Novartis. The minority shareholders are unaffected by this deal - they were minority holders under Nestle and will continue to be under Novartis.”

The spokesperson further mentioned that Novartis has completed the first part of the transaction with Nestle. She added they expect to complete the second step, but did not provide specific timing.

Speaking to investors at the UBS Global Life Sciences Conference on Tuesday, Zausner said Alcon would have synergies with CebaVision, the eye care unit of Novartis, and both stood to benefit from each others’ presence.

She further told this news service that, with regards to merger and acquisition activity, Novarits is “always looking” and deals in the USD 2bn range were most attractive. She pointed to the Novartis acquisition of Austrian specialty generics business EBEWE Pharma for USD 1.2bn as an example of the type of deals Novartis would continue to pursue.

She added that larger mergers in the USD 40bn range are a distraction, pointing to the deals between Pfizer (NYSE:PFE)/Wyeth (NYSE:WYE) and Merck (NYSE:MRK)/Schering-Plough (NYSE:SGP).

Zausner stated the focus of Novartis remains in cardiovascular, oncology and the eye care market. She stressed that Novartis was dedicated to remaining a diversified company.

A separate Novartis representative also in attendance at the conference stated that generics, vaccines and animal health all remained core to Novartis’s business portfolio as well.

Zausner confirmed Novartis had been looking at the Pfizer/Wyeth’s animal health assets, some of which were recently divested to Boehringer Ingelheim.

She further commented that there are no further capital raises planned for 2009, but next year was a possibility. Earlier this year Novartis launched a USD 5bn two-tranche bond offering in the US.

--------------------------------------------------------------------------------------------------------

For more information or to inquire about a trial please email sales@dealreporter.com or call Europe/EEMEA: +44 (0)20 7059 6160 Americas: +1 212 686-3076 Asia-Pacific: +852 2158 9714