Hardly a surprising deal. The big drugmaker offered to buy the rest ofAlcon, the world’s largest eye-care company, from Nestle and minority shareholders. This is the second step in a deal that gave Novartis a 25 percent stake and is now worth a total of about $50 billion. In the latest move, Nestle will sell its 52 percent share to Novartis, which will hold 77 percent, and the drugmaker also offered to pay $153 a share for each remaining outstanding Alcon share. Here's what a few analysts are saying:
The offer is “a good move,” Helvea SA analyst Karl Koch tells Bloomberg News. “It generally is good news in the sense that it alleviates concerns that they would not be able to pay the cost of capital because now they get full control and can realize the full synergies and that’ll also help earnings.”
Sarasin analyst David Kaegi noted that “the deal as such was expected, but the price Novartis is paying is too high." At the same time, he believes Novartis will have to improve its offer to Alcon’s minority shareholders. "I don't think they'll get the rest of the shares for that price.”
In an investor note, Sanford Bernstein analyst Tim Anderson writes that: "Alcon is – in our view at least – not an acquisition that will dramatically change Novartis' fundamentals. It will bring to Novartis a good eye care business, and will flesh out the company's existing presence in eye care that it already has with its ex-US ownership of Lucentis, but in a way it will just represent one more disease area for the company. Strategically, this makes sense."
Anderson adds that Novartis believes Swiss merger law says a simple majority of Alcon board votes and two-thirds of Alcon shareholders need to support the deal. So once Novartis owns 77 percent, it appears that Novartis can force through the rest of the transaction, implying the $153 below-market price Novartis is offering is likely to stand. This comes as a surprise, and is different from how minority interest transactions are handled in the US.