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on recent mnc acquisition - Research Paper Example
Author : wisozkjoaquin
Finance & Accounting
Pages 7 (1757 words)
Acquisition Selected In 2010, Novartis acquired majority stake in Alcon. Novartis initially owned 25% stake in Alcon and then acquired the remaining 52% form Nestle and the deal was worth USD 28.3 billion. …
The annual sales of Alcon in 2009 was above USD 6.6 million and its operating profit stood over USD 2.2 billion while net income was over USD 1.99 billion. The acquisition of the Alcon will give Novartis the opportunity to expand its portfolio in the eye care segment where there is a latent potential for growth due to aging population and globalisation of emerging markets. The combined portfolio of Alcon and Novartis can now tackle a broad range of untapped demands in this segment. The most important thing to note about the success of this acquisition is the complementary pharmaceutical portfolios of these two companies that filled the gaps between the back and frontal eye. It also has the chance to gain leverage form its strong global brands in eye lens. Financial impact In April 2008, Novartis and Nestle entered into agreement for Nestle’s sale of 77% stake in Alcon. It was divided in two stages – stage one required Novartis acquiring 77% majority stake in Alcon from Nestle by paying $168 per share taking the deal to $ 38.7 billion. In this stage Novartis acquired 25% stake in Alcon for $ 10.5 billion. In the second stage, Novartis acquired remaining 52% stake from Nestle for $ 28.4 billion. The majority stake cost Novartis $ 38.69 billion that includes adjustments for interest and dividend. The initial 25% stake was financed by $ 17 billion in cash and $ 13.5 billion was financed by bonds. ...