HUENENBERG, Switzerland—Alcon, Inc. (NYSE: ACL) announced yesterday that its board of directors approved a merger agreement with Novartis AG, whereby Novartis will pay a total merger consideration valued at $168 per share for the Alcon shares it does not currently own. Under the terms of the deal, the merger consideration will be comprised of a combination of Novartis shares and, if necessary, a cash contingent value amount to result in a total value of $168 per share. The exact exchange ratio and cash contingent value amount will be calculated based upon formulas set forth in the merger agreement.

In accordance with Alcon's Organizational Regulations and after receiving a fairness opinion from its independent financial adviser, Greenhill & Co., the Independent Director Committee (IDC) recommended approval of the merger agreement to the Alcon board. The board also received a separate fairness opinion rendered by Lazard in connection with the transaction. After considering these items and other appropriate information and factors, the Alcon board approved the merger proposal.

The merger, to be effected under Swiss merger law, is expected to be completed during the first half of 2011. Completion is conditional, among other things, on two-thirds approval by the shareholders of both Novartis and Alcon voting at their respective meetings, and the registration and listing of Novartis shares on the SIX Swiss Exchange and American Depository Shares on the New York Stock Exchange to be issued as merger consideration. The date of the Alcon shareholders' meeting to approve the merger will be announced in the future.

"This merger will create a stronger eyecare business with broader commercial reach and enhanced capabilities to develop more new and innovative eyecare products that address unmet clinical needs in eyecare," said Kevin Buehler, Alcon's president and CEO. "The combination of Alcon's deep understanding of the eyecare specialty and the broad expertise and scale of Novartis will allow us to address virtually all key areas of eyecare with quality products and will position the Alcon business for faster growth."

"I congratulate the entire Alcon board, including the IDC, and Novartis for achieving a favorable resolution on the merger in a manner consistent with our Organizational Regulations. This now allows us to begin planning for the integration and creation of a dynamic eyecare division within Novartis after final shareholder approval," added Buehler. "I also thank our employees for their patience and for maintaining their focus on Alcon's business activities during this process."

Upon completion of the merger, Alcon will become the second largest division within Novartis. CIBA VISION and select Novartis ophthalmic medicines will be integrated into Alcon, forming an organization with more than $8.7 billion in sales covering over 70 percent of the eyecare segment. The merger of the two organizations is expected to yield a number of benefits to the company and its customers, a statement said, including increased commercial capability, the development of innovative eyecare products that reach the market faster, cost efficiencies which can be reinvested in research and other opportunities and enhanced product development and branding in contact lenses and solutions.

"Alcon is a great strategic fit for Novartis, as a science-based leader in a high growth segment of healthcare. The growth synergies are significant, as Alcon will be the development engine for our best in class research organization in eyecare and will leverage the Novartis market access capabilities outside the U.S.," said Joseph Jimenez, CEO of Novartis. "I am very pleased that we were able to come to this agreement and will be able to provide Alcon employees the full benefits of being part of the Novartis Group."