Novartis plans to divest the Alcon eye care business to shareholders and repurchase up to $ 5 billion as CEO Vas Narasimhan restructures the Swiss group for prescription drugs.
Alcon, a legacy of former Novartis boss Daniel Vasella Employment creation was problematic as it was bought in 2011 for $ 52 billion. Narasimhan declined to give a review on Friday for the business, although his predecessor Joe Jimenez estimated it at only $ 25 to $ 35 billion.
Bank Vontobel analysts, however, said it could be worth between $ 15 billion and $ 23 billion, adding that its continued recovery would affect the final price.
Novartis has had to make massive investments in Alcon to reverse declining sales and losses, even though revenues are on the rise again. It posted operating profit of $ 90 million in the first quarter.
Alcon, which has annual sales of $ 7 billion, will be divested by Novartis and distributed to investors Englisch: www.swiss.com/web/en/about_swiss/me…0050202.aspx to obtain the approval of shareholders for the spin-off, which is scheduled to be completed in the first half of 201
Novartis shares rose 3.3% at 0935 GMT as investors welcomed Alcon's separation and share buy-back.
"Transaction details and proposed valuation remain intact However, this should feel like a win for Novartis shareholders," said Andy Smith, an analyst at Edison Investment Research. "Actually two profits" with the share buyback, he added.
Narasimhan, a Harvard-trained US physician, is advancing Jimenez's turnaround from a decade of expansion under Vasella, the former CEO and chairman. (https://reut.rs/2KvMKPK)
After Vasella's departure in 2013, Novartis has withdrawn vaccines, discontinued its pet health business, and this year released its GlaxoSmithKline consumer health joint venture for approximately $ 13 billion.
"A company like ours needs to focus our capital on our area of strength, which I believe is world class medicine, and I want to build our strength in digital and data technologies," Narasimhan told reporters.