Novartis signs merger agreement with Alcon

Under terms of agreement, merger consideration will include up to 2.8 Novartis shares and a CVA to b

Novartis has entered into a definitive agreement with Alcon to merge Alcon into Novartis for Novartis shares and a Contingent Value Amount (CVA).
Alcon's board of directors approved a merger agreement with Novartis.

Under the terms of the agreement, the merger consideration will include up to 2.8 Novartis shares and a CVA to be settled in cash that will in aggregate equal $168. If the value of 2.8 Novartis shares is more than $168 the number of Novartis shares will be reduced accordingly.

The merger is currently expected to be completed during the first half of 2011 and is conditional on clearance of a registration statement by the US Securities and Exchange Commission, two-thirds approval by the shareholders of each of Novartis and Alcon voting at their respective meetings and other customary closing conditions.

Novartis said that following completion of the merger, Alcon will become the new eye care division of Novartis, including CIBA Vision and ophthalmic medicines.

After the merger, Alcon will be able to capitalise on commercial opportunities to develop and brand contact lenses collaboratively with contact lens solutions in order to capture new patients and increase the number of patients that use contact lenses to correct their vision.

Alcon president and CEO Kevin Buehler said that this merger will create a stronger eye care business with broader commercial reach and enhanced capabilities to develop more new eye care products that address unmet clinical needs in eye care.

Novartis CEO Joseph Jimenez said that the growth synergies are significant, as Alcon will be the development engine for their research organisation in eye care and will leverage the Novartis market access capabilities outside the US.

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.