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Published on 26 August 2010

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Novartis completes 77% majority ownership of Alcon

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Novartis announced today that it has completed its purchase of Alcon stock from Nestlé resulting in 77% ownership of Alcon. This has been achieved by completing the acquisition of the remaining 52% of Alcon shares owned by Nestlé for a total of USD 28.3 billion.

Alcon strategically complements Novartis’ business portfolio, adding a world class growth platform in eye care to its Pharmaceutical, Generics, Vaccines and Diagnostics and Consumer Health Divisions, building an even stronger leadership position in healthcare. Alcon is the world’s largest and most profitable eye care company with 2009 annual sales of USD 6.5 billion, operating income of USD 2.3 billion and net income of USD 2.0 billion.

The eye care sector offers further growth opportunities underpinned by the increasing unmet needs of emerging markets and an aging population. The Alcon and Novartis eye care portfolios address a broad range of these unmet needs. The companies have complementary pharmaceutical portfolios for diseases in the front and back areas of the eye as well as strong global brands in lens care. Alcon is a global leader in ophthalmic surgical products while Novartis has a broad contact lens portfolio and advanced technologies.

“We are delighted to become majority owners of Alcon. Together, both companies can achieve their strategic priorities to deliver against patient needs through innovative and differentiated products” said Joseph Jimenez, CEO of Novartis.

“I believe that Alcon will benefit from having a majority owner that is a global leader in health care,” said Kevin Buehler, President and CEO of Alcon. “With this change, Alcon and Novartis can seek out opportunities to create greater value through arm’s-length agreementsthat leverage our combined strengths and capabilities.”

With the achievement of the 77% majority ownership, Novartis and Alcon will be able to create greater value together for all stakeholdersthrough collaborations that would benefit both companies. These could include opportunities with Lucentis®, for example, utilizing the companies’ complementary field forces around the potential launch of Lucentis for Diabetic Macular Edema. In addition, joint sourcing and procurement programs could leverage the combined purchasing volume of both companies. Other opportunities include optimization of lens care manufacturing and research collaborations. All collaborations between the companies would be within the framework of arm’s length transactions.

These value creating opportunities between the two companies could generate approximately USD 200 million of potential annual pre-tax cost synergies.

As announced on January 4, 2010, Novartis has proposed to simplify Alcon’s ownership structure by offering to acquire the remaining 23% held by minority shareholders. To attain full ownership, a direct merger of Alcon into Novartis AG is proposed under the Swiss Merger Act at a fixed exchange ratio of 2.8 Novartis shares for each remaining Alcon share. In arriving at this proposal, Novartis considered a number of factors, including an assessment of the fundamental value of Alcon, and the unaffected Alcon share price as adjusted for speculation regarding the intentions of Novartis.

Novartis



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