Novartis AG (NYSE: NVS) said Monday it plans to take over Alcon Inc. (NYSE: ACL) by paying $38.5 billion for the 77 percent stake it does not already own, according to Associated Press.
Novartis will purchase Nestle SA's 52 percent stake for $28 billion before carrying out a merger with Alcon that would give it control of the remaining 23 percent held by minority shareholders.
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The Swiss pharmaceutical company had already purchased 25 percent of Alcon from Nestle in April 2008 for $11 billion, with the option of buying the company's remaining stake at a later date.
Novartis will finance the deal using a combination of cash reserves, loans of up to $16 billion, and by issuing 98 million new shares in its own stock. The stock issuance will require shareholder approval.
Under the terms of the merger proposal, minority shareholders would receive 2.8 Novartis shares for each Alcon share.
Based on the Novartis share price and exchange rates prior to the announcement, this would value each publicly traded share of Alcon at approximately $153, which is significantly less than the $180 per share Novartis is offering for Nestle's remaining 52 percent.
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