Novartis Announces Plans to Spin Off Alcon

June 29, 2018: By Jon Swedien

Novartis intends to spin off Alcon into a separately traded, standalone company in 2019, the Swiss firm announced June 29.

The move is subject to shareholder approval at a February 2019 meeting.

Company officials said the spinoff would enable Novartis and Alcon to focus fully on their respective growth strategies.

Novartis also announced that it will start a share buyback of up to $5 billion in 2019 with proceeds from the $13 billion sale of its stake in a consumer-health joint venture with GlaxoSmithKline.

“Alcon has returned to a position of strength, and it is time to give the business more flexibility to pursue its own growth strategy as the world’s leading eye care devices company,” Novartis CEO Vas Narasimhan, MD, said.

The spinoff would create a new Switzerland-based global company with more than 20 thousand employees. Alcon reported about $7 billion in sales in 2017.

Fort Worth, Texas, would continue to be a key location for Alcon.

Mike Ball will become Alcon’s chairman-designate, as of July 1, and will report to Narasimhan. Ball would become Alcon’s chairman if Novartis completes the spinoff. In the meantime, he will recruit board directors, while also stepping down from Novartis’ executive committee.

Alcon COO David Endicott will be become CEO on July 1 and will also report to Narasimhan until the potential spinoff. Ball will begin handing over operational management duties to Endicott in July.

Novartis Chairman Joerg Reinhardt said the company’s recent strategic review found that a spinoff is in the best interest of Novartis shareholders.

Novartis purchased a 25 percent share of Alcon from Nestle in April 2008 and completed its purchase of the remaining Nestle shares in early 2011.

When Novartis acquired Alcon, it included surgical, vision care, and ophthalmic pharmaceuticals. Novartis in 2016 began transferring Alcon’s ophthalmic pharmaceuticals to its own Innovative Medicines Division, which will remain with Novartis.

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