Novartis on Friday announced plans to spin off its Fort Worth-based Alcon eye care business to shareholders.
According to Novartis, the plan would allow Novartis to focus on its prescription drug business, while Alcon would concentrate on its eye care business.
“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 [general meeting]. 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.”
If the Alcon spinoff is completed, it would create a new Switzerland-based company with more than 20,000 employees, with around $7 billion in 2017 sales. Fort Worth will continue to be a key location for Alcon, according to the Novartis news release. .
Actions started earlier this year to make Alcon an operationally autonomous medical devices business will continue in preparation for a spinoff, the news release said.
The plan would be for current Alcon President Mike Ball to become become Chairman-designate of Alcon, effective July 1, 2018, reporting to Vas Narasimhan, CEO of Novartis. Ball will focus on preparing Alcon for the intended spin off. In addition, he will start the process of recruiting a Board of Directors (BoD) for Alcon and meeting Novartis shareholders, and other potential investors, in preparation for the potential spinoff. If Alcon becomes an independent company, Ball would become chairman of the Alcon board. In order to focus fully on the Alcon separation, Ball will step down from the Executive Committee of Novartis (ECN) on July 1, 2018.
David Endicott, chief operating officer (COO) of Alcon since July 2016, will be promoted to CEO of Alcon, also effective July 1, 2018. He will also report to Narasimhan until the potential spinoff. Over the coming weeks, Ball will hand over operational management responsibilities to Endicott.
Endicott has previously held senior leadership positions with Allergan and Hospira. As Alcon COO he played an integral role in the turnaround of the business, according to the news release.
“This promises to be the beginning of an exciting new chapter for everyone associated with Alcon,” said Ball. “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 transaction is subject to general market conditions, tax rulings and opinions, final Board of Directors endorsement and shareholder approval at the 2019 AGM in line with Swiss corporate law.
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 best-in-class businesses with the transfer of Alcon’s ophthalmic pharmaceuticals to the Novartis Innovative Medicines Division. The leading ophthalmology pharmaceuticals business will continue to develop as part of Novartis, with 2017 sales of $4.6 billion and the potential blockbuster medicine RTH258 (brolucizumab) in development for neovascular AMD and diabetic macular edema. The Alcon Division is now fully focused on surgical and vision care, and continues to be the global leader in eye care devices.
Novartis International AG shares were up $2.54 to $75.54 at the end of the day Friday.