The eyecare business will be a standalone company.
Novartis announced that it will spin off Alcon, its eyecare division, into a separately traded standalone company.
The company also said it will initiate a share buyback of up to $5 billion to be executed by the end of 2019.
The spinoff would create a new Switzerland-based company with more than 20,000 employees. Fort Worth will continue to be a key location for Alcon.
“Our strategic review examined all options for Alcon ranging from retention, sale, IPO to spinoff,” said Joerg Reinhardt, chairman of Novartis. “The review concluded that a spinoff would be in the best interests of Novartis shareholders and the Board of Directors intends to seek shareholder approval for a spinoff at the 2019 AGM. This transaction would allow our shareholders to benefit from potential future successes of a more focused Novartis and a standalone Alcon, which would become a publicly traded global medtech leader based here in Switzerland.”
When Novartis acquired Alcon in 2011, the business included surgical, vision care and ophthalmic pharmaceuticals. In January 2016, Novartis began the process of creating two businesses with the transfer of Alcon’s ophthalmic pharmaceuticals to the Novartis Innovative Medicines Division. The ophthalmology pharmaceuticals business “will continue to develop as part of Novartis, with 2017 sales of USD 4.6 billion and the potential blockbuster medicine RTH258 (brolucizumab) in development for neovascular AMD and diabetic macular edema,” according to a press release. The Alcon Division is now focused on surgical and vision care.
“We continue to execute our strategy to focus Novartis as a leading medicines company,” said Dr. Vas Narasimhan, CEO of Novartis. “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. We will work to ensure a smooth transition for Alcon and Novartis associates while preparing for the launch of RTH258 and building our leading ophthalmology pharmaceuticals business.”
Mike Ball will become chairman-designate of Alcon effective July 1, reporting to Narasimhan. If Alcon becomes an independent company, Ball would become chairman of the Alcon board. Ball will step down from the executive committee of Novartis on July 1.
David Endicott, chief operating officer of Alcon since July 2016, will be promoted to CEO of Alcon, also effective July 1.
Ball said: “This promises to be the beginning of an exciting new chapter for everyone associated with Alcon. The planned spinoff will be key to strengthening our leadership in the large, attractive and growing global eye care devices market. As Chairman-designate, I look forward to working closely with David Endicott and the entire team at Alcon to deliver continued innovation for our customers and patients, while creating shareholder value through long-term, sustainable growth.”
Completion of the planned spinoff is subject to “general market conditions, regulatory approvals, final Board of Directors endorsement and shareholder approval.”
According to the release, “the intention would be to list shares of Alcon on the SIX Swiss Exchange and the New York Stock Exchange.”