Swiss food giant Nestlé is to sell its remaining 52% stake in Alcon to health-care giant Novartis.

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The pharmaceuticals group this morning (4 January) exercised its call option to buy 156,076,263 shares in Alcon for around US$28bn in cash.


Novartis bought 25% of Alcon in April 2008 for $10.4bn and plans to buy the remaining 23% of Alcon, offering investors a 12% premium if they agree to exchange their Alcon shares for Novartis ones. This move will cost around $11.2bn.


Nestlé CEO Paul Bulcke said: “I am happy to be part of this successful creation of shareholder value by Nestlé. This divestment of our interest in Alcon will enable our management to concentrate on accelerating the development of Nestlé’s position as the world’s leading nutrition, health and wellness company.”


The transaction is subject to regulatory approval and Nestlé expects the process to be completed around the middle of this year.

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Alcon was acquired by Nestlé in 1977 for $280m. Nestlé sold 23% of Alcon in a 2002 IPO for $2.2bn. The company then divested a 25% stake to Novartis in 2008 for $10.4bn.


“This gradual divestment has ensured that Nestlé has achieved full and fair value for its shareholders. With the transfer of control from Nestlé to Novartis, Alcon will benefit from its relationship with a leading global pharmaceutical company, whose R&D capabilities are more closely aligned to develop the business going forward,” the company said.


Nestlé has also announced its intention to launch an additional share buy-back programme of CHF10bn (US$9.67bn), which will start in 2010 for two years, once the existing programme of CHF25bn has been completed.


Nestlé said it will make the necessary filings with the Swiss Takeover Board in due course.