HUENENBERG, Switzerland—Nestlé S.A. (NESN.VX) and Novartis AG (NYSE: NVS) announced today they have reached an agreement through which Novartis will acquire, in a two-phase deal, a majority stake in Alcon (NYSE: ACL) from Nestlé for a total of approximately $39 billion.

Initially, Novartis expects to buy an initial stake of 25 percent in Alcon in the second half of 2008 for about $11 billion, and to acquire Nestle's remaining 52 percent stake for about $28 billion between January 2010 and July 2011. Novartis doesn't plan to buy the roughly 23 percent of Alcon that is publicly traded, Novartis chairman and chief executive Daniel Vasella, MD, told analysts.

Alcon sells surgical devices for eye surgery, medicines for eye diseases such as glaucoma, and contact-lens solutions and eye drops. It had sales of $5.6 billion and net income of $1.6 billion last year.

Novartis already is active in eyecare through its Ciba Vision contact lens operations, and through Lucentis, a drug that treats a severe eye disease that can lead to blindness.

The agreement also provides for the expansion of the Alcon board of directors from eight to 10 members, with one of the additional members designated by Nestlé and one designated by Novartis.

The nominees for these additional board seats are James Singh, currently Nestlé's executive vice president and chief financial officer, and Vasella. Shareholders will vote on whether to expand the Alcon board and to elect these nominees at Alcon's upcoming annual general meeting, to be held on May 6 in Zug, Switzerland. Alcon distributed proxy materials to its shareholders on April 2; it will distribute a new proxy form to shareholders incorporating these additional items.

"I welcome Novartis as a minority investor, and I believe the agreement validates Alcon's leadership and bright future in the attractive and growing eyecare market," said Cary Rayment, Alcon's chairman, president and chief executive officer. "It is also a testament to all of our employees who have been responsible for making Alcon the global leader in the eyecare market." The purchase and sale transaction is subject to regulatory approvals.

Vasella also told analysts he didn't expect any antitrust hurdles to the Alcon deal.