Nestlé to Sell 24.85% of Alcon Shares to Novartis

07/04/08 Nestlé and Novartis have signed an agreement providing for the sale of 24.85 percent of Alcon's issued capital to Novartis. The cash transaction concerns 74 million Alcon shares at USD 143.1783 per share, with an aggregate value of approximately USD 11 billion. Nestlé will retain close to 52 percent of Alcon’s issued capital and continue to fully consolidate Alcon. There is no capital gains tax impact on Nestlé.

The proceeds of the transaction will be used by Nestlé to reduce debt as the company pursues its on-going share buy-back program. In addition, these proceeds will support opportunities for profitable growth in line with the Group's nutrition, health and wellness orientation. The transaction will have a positive effect on reported earnings per share (EPS) in 2008 and should be neutral on underlying EPS in 2008 and beyond. The transaction is subject to regulatory review and Nestlé expects the process to be completed before autumn of 2008.

In addition, Nestlé and Novartis have agreed put and call option rights on the remaining Alcon shares owned by Nestlé. From January 2010 till July 2011, Novartis will have a call option to acquire Nestlé's remaining majority shareholding in Alcon. This call option is at a fixed price of USD 181.- per share. During the same period, Nestlé will also have a put option to sell its remaining majority shareholding in Alcon to Novartis at the lower of either the call price of USD 181.- per share or the average share price during the week preceding the exercise plus a premium of 20.5 percent. The completion of the sale of Nestlé’s remaining shareholding in Alcon would also be subject to regulatory approval.

Peter Brabeck-Letmathe, Chairman and CEO of Nestlé said: "Today's decision reflects Nestlé's commitment to ensure a strategically sound and financially attractive solution for Nestlé and Alcon. Nestlé has been able to take a further step in realizing shareholder value from its long-term Alcon investment. Alcon benefits from having a new minority shareholder whose activities are closely aligned with its own business and I am certain that this strategic decision will strengthen Alcon's leadership position in the very promising ophthalmic area."