Novartis AG is going to buy Nestle AG's 77 percent stake in U.S. company Alcon for $39 billion to bolster its eye care business.
Novartis will acquire a first, 25 percent stake in Alcon for $11 billion and has an option to buy Nestle's remaining 52 percent stake for a fixed price of $28 billion between January 2010 and July 2011.
Novartis would afford the first stake in Alcon with money taken from its cash reserves and external short-term financing.
It would finance a possible buy 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 cut debt.
Novartis International AG is a multinational pharmaceutical company based in Basel, Switzerland that manufactures different important drugs (clozapine, diclofenac, carbamazepine, cyclosporin A, letrozole) including genetic drugs through Sandos, a large manufacturer of generic drugs, which it owns.
Alcon, headquartered in Hünenberg, Switzerland, is a global medical company specializing in eye care products. Alcon's U.S. headquarters is located in Fort Worth, Texas.
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