NOVARTIS : to acquire majority control of Alcon, a global leader in eye care, and proposes merger for full ownership

NOVARTIS AG CHF0.50(REGD) / Novartis to acquire majority control of Alcon, a global leader in eye care, and proposes merger for full ownership processed and transmitted by Hugin AS. The issuer is solely responsible for the content of this announcement. 

  * Novartis strengthens its presence in growing eye care sector with Alcon


      * Novartis and Alcon have highly complementary product portfolios covering
        more than 70% of global vision care sector: pharmaceuticals, surgical
        products, contact lenses and OTC brands

  *   * Eye care offers dynamic growth opportunities underpinned by high unmet
        needs of an aging population


  * Alcon to become a 77% majority-owned Novartis subsidiary upon completion of
    the April 2008 agreement with Nestlé

  *   * After purchasing a 25% stake in April 2008 for USD 143 per share,
        Novartis exercises its call option to buy additional 52% stake from
        Nestlé for USD 180 per share[1], or USD 28.1 billion

  *   * Total cost for 77% majority stake of USD 38.5 billion, or USD 168 per
        share


  * Proposal for subsequent all-share direct merger of Alcon into Novartis to
    avoid uncertainty and speculation on Alcon?s future in interest of all
    stakeholders

  *   * Fixed exchange ratio proposal of 2.80 Novartis shares for each remaining
        Alcon share, a 12% premium to unaffected Alcon share price of USD 137

  *   * Merger proposal subject to closing of Nestlé transaction, implied cost
        for23% minority stake of USD 11.2 billion, or USD 153 per Alcon share


  * After merger, new Novartis eye care division to include Alcon, CIBA Vision
    and selected ophthalmic medicines


Basel,  January 4, 2010 ? Novartis intends to  gain full ownership of Alcon Inc.
(NYSE:  ACL) by  first completing  the April  2008 agreement with Nestlé S.A. to
acquire  a 77% majority stake  in a global  leader in eye  care and subsequently
entering  into  an  all-share  direct  merger  with Alcon for the remaining 23%
minority                                                                  stake.

Novartis  believes this merger, which will be implemented under the Swiss Merger
Act,  is in the interest of all stakeholders and will provide the needed clarity
on                                Alcon?s                                future.

Alcon  will strengthen the  Group?s portfolio focused  on healthcare and provide
greater access to the fast-growing global eye care sector, which is driven by an
aging       population,       innovation       and       emerging       markets.

?The  addition of Alcon  will strategically strengthen  our healthcare portfolio
and our position in eye care, a sector with dynamic growth due to the increasing
patient needs of an aging population,? said Dr. Daniel Vasella, Chairman and CEO
of  Novartis. ?This is the right time to simplify Alcon?s ownership to eliminate
uncertainties  for  employees  and  shareholders.  It  will  also  allow  us  to
strengthen  innovation power by combining R&D efforts and grow our global market
presence     thanks     to     our     complementary     product    portfolios.?

Alcon     and     Novartis    have    complementary    eye    care    businesses
Alcon  and Novartis have attractive global activities in eye care, each offering
their  own competitive positions in  highly complementary segments that together
cover  more than 70% of the global  vision care sector. Aligning these strengths
can  result in offering even more compelling products that make a difference for
patients                   around                   the                   world.

Alcon,  which is incorporated in Switzerland and has US operations based in Fort
Worth,  Texas, has  developed leading  positions in  its three  business sectors
through a consistent focus on eye care since its creation in 1945:

Surgical            (2008            sales:           USD           2.9 billion)
Alcon  is the  global leader  in cataract  and vitreoretinal surgery, offering a
portfolio of medical devices and ophthalmic surgery products. In 2008, more than
60% of  micro-incision cataract surgeries  ? where the  eye?s lens is broken up,
removed  and replaced by an artificial  intraocular lens (IOLs) ? were performed
with  Alcon equipment.  Alcon is  also the  global leader  in IOLs  based on the
AcrySof®   family,   which   exceeded   USD   1 billion   of   sales   in  2008.

Pharmaceuticals          (2008          sales:          USD         2.6 billion)
Alcon has a portfolio of specialty medicines for various eye diseases, including
glaucoma  and  conditions  in  the  front  of  the  eye  such  as infections and
allergies.  Strong growth  has come  from new  product introductions  and global
expansion,  particularly in Japan, where three  new medicines have been launched
since                                                                      2006.

Consumer            (2008            sales:           USD           0.8 billion)
Alcon provides a portfolio of contact lens care products, OTC (over-the-counter)
dry  eye drops and ocular  vitamins, with emerging markets  a key growth driver.

Novartis has long-standing activities in contact lenses, a sector in which Alcon
is  not  active,  and  a  complementary  ophthalmic  pharmaceuticals  portfolio:

CIBA       Vision       (2008       net       sales:       USD      1.7 billion)
A global leader that generated 85% of its 2008 annual sales from contact lenses,
CIBA  Vision has been growing  in 2009 thanks to new  product launches in theAir
Optix  family  of  monthly  silicone  hydrogel  lenses  and the Dailies range of
disposable  lenses.  CIBA  Vision  also  offers  a  range of lens care products.
Selected   ophthalmic   pharmaceuticals   (2008   net  sales:  USD  0.5 billion)
Novartis  provides a range of complementary medicines  used to treat a number of
eye  diseases not  addressed by  Alcon?s portfolio.  In addition  to its product
portfolio,  Novartis has an extensive R&D pipeline with projects targeting novel
ways  to treat various  forms of eye-related  diseases.Lucentis (2008 net sales:
USD 0.9 billion), a therapy for ?wet? age-related macular degeneration that is a
leading cause of blindness in people over age 55, will not be transferred to the
new  eye care  division, but  instead co-promoted,  an approach that has already
proven           to           be           effective          in          Japan.

Following  successful completion of  the merger,Alcon would  be established as a
new  Novartis division that incorporates these highly complementary assets. This
new  eye care division will have  enhanced opportunities to accelerate expansion
in  high-growth regions, generate greater value from combined product portfolios
and        capitalize        on       strengthened       R&D       capabilities.
Alcon        majority        ownership        transfer        from        Nestlé
Novartis  and  Nestlé  entered  into  an  agreement in April 2008 for the smooth
transition    of   Nestlé?s   77% majority   stake   in   Alcon   to   Novartis.

In  2008, Novartis acquired  a 25% stake  in Alcon  for USD 10.4 billion, or USD
143 per  share,  financed  from  internal  cash reserves and external short-term
financing.

On  January  4, 2010, Novartis  and  Nestlé  initiated  completion  of the 2008
agreement,  whereby Novartis is  exercising its call  option to acquire Nestlé?s
remaining  52% Alcon  stake  for  USD  28.1 billion,  or USD 180 per share. This
acquisition,  which is subject to required  regulatory approvals, is expected to
be  completed in  the second  half of  2010. This purchase  will be  funded from
available        liquidity        and       external       debt       financing.

Together,  these  transactions  are  estimated  to  cost approximately USD 38.5
billion,  and at  an average  cost of  USD 168 per  share, which reflects a 17%
premium  over USD 143.18, which was agreed by  Novartis and Nestlé to be Alcon?s
market               price              in              April              2008.

With a 77% Alcon majority stake, Novartis believes approximately USD 200 million
of  annual pre-tax  cost synergies  could be  generated within three years after
closing  through shared  service agreements,  collaborations, joint ventures and
other                           business                           arrangements.

Merger      proposal      offers      benefits      to      all     stakeholders
The  Novartis Board  of Directors  believes it  is in  the best  interest of all
stakeholders  ? the shareholders of Alcon  and Novartis, their employees and the
patients  who  benefit  from  their  products  ?  to  simplify Alcon?s ownership
structure  by making  a proposal  to acquire  the remaining 23% held by minority
shareholders.

Alcon  will  be  an  important  contributor  to  Novartis,  with  its associates
constituting  the major part of  a new eye care  division that will benefit from
access  to  the  Group?s  global  operations, expertise and resources. Attaining
100% ownership  will also avoid speculation about  the minority stake and enable
the  companies to  move faster  to achieve  the full  potential of  the combined
businesses.

To attain full ownership, a direct merger of Alcon into Novartis AG is proposed
under the Swiss Merger Act. Novartis offers a fixed exchange ratio of 2.80
Novartis shares for each remaining Alcon share. Alcon?s shareholders will have
the choice of receiving Novartis American Depositary Shares (ADSs) as merger
consideration.

Based on the Novartis closing share price of CHF 56.50 on December 30, 2009 (the
last trading day before this announcement) and an exchange rate of CHF 1.04 =
USD 1.00, this proposal represents an implied price of USD 153 per Alcon share
and a 12% premium to Alcon?s unaffected publicly-traded share price.

In arriving at this proposal, Novartis considered a number of factors,
including: assessment of the fundamental value of Alcon; the unaffected Alcon
share price as adjusted for speculation regarding the intentions of Novartis;
the total per-share price of acquiring Nestlé?s 77% majority stake and the
governance rights afforded under Swiss law; lower earnings expectations for
Alcon since April 2008; incremental cost synergies provided by the merger;
appropriately comparable premiums typically applied to unaffected share prices
for acquiring a minority stake; and the economic interests of Novartis
shareholders.

Completion of the merger is expected to provide additional annual pre-tax cost
synergies of approximately USD 100 million within three years after closing,
driven mainly by elimination of public company expenses and consolidation of
duplicate functions and processes. The strong growth outlook in eye care is
anticipated to compensate for integration-related workforce reductions, which
would be implemented in a socially responsible manner.

The merger will be conditional on the closing of the 52% stake acquisition from
Nestlé and would require approval by the Boards of Directors of Novartis and
Alcon. The merger would also require two-thirds approval by the shareholders of
Novartis and Alcon voting at their respective meetings. This proposal does not
include a due diligence condition. Under Swiss law, Novartis has the right to
vote its Alcon stake in favor of the proposed merger.

Financial impact of proposed transactions to Novartis
Costs for full acquisition of Alcon, including the initial 25% stake purchased
in mid-2008, are estimated at USD 49.7 billion.

The transaction to acquire Nestlé?s remaining 52% majority stake for USD 28.1
billion is planned to be funded with available cash resources and up to USD 16
billion of external short- and long-term debt funding.

For the merger, Novartis will ask its shareholders to approve the issuance of
98 million new shares, which together with 107 million shares already held in
treasury will be used to finance the acquisition of the Alcon minority shares at
an implied cost of USD 11.2 billion. As of November 30, 2009, Novartis had
2,285 million fully diluted shares outstanding.
The Board of Directors has decided to use equity as a consideration to Alcon?s
minority shareholders to enable Novartis to maintain its strong credit rating,
preserving its firm financial foundation and providing flexibility for future
growth.

In the first year after closing, these transactions to increase the Group?s
stake in Alcon from 25% to 100% are expected to be approximately 9% dilutive to
fully diluted earnings per share, but approximately 1% accretive to core[2]
earnings per share.

The transactions are not expected to have an effect on the Group?s credit
ratings. Moody?s rates the Group as Aa2 for long-term maturities and P-1 for
short-term maturities and Standard & Poor?s has a rating of AA- and A-1+, for
long-term and short-term maturities, respectively. Fitch has a long-term rating
of AA and a short-term rating of F1+. These agencies have maintained a ?stable?
outlook.

Note to investors
Novartis has scheduled a conference call with members of the financial community
to discuss this announcement on Monday, January 4, at 14:00 Central European
Time. A simultaneous live webcast, as well as additional information on this
transaction including a copy of the Novartis letter to the Alcon Board of
Directors, may be accessed by visiting the Novartis website atwww.novartis.com.

Disclaimer
The foregoing release contains forward-looking statements that can be identified
by  terminology such as ?will  strengthen,? ?would have enhanced opportunities,?
?would   be  established,?  ?complementary  assets,?  ?synergies,?  ?estimated,?
?expected,?   ?potential,?  ?accretive,?  ?dilutive,?  ?anticipate,?  ?propose,?
?enable,?  ?preserve,?  ?strategic,?  or  similar  expressions, or by express or
implied  discussions regarding  the potential  impact on  Novartis of  the Alcon
acquisition  and  proposed  merger,  including  express  or  implied discussions
regarding  potential future  sales or  earnings of  the Novartis  Group or Alcon
andany  potential synergies, strategic benefits or  opportunities as a result of
the  acquisition and  proposed merger.  You should  not place  undue reliance on
these  statements. Such forward-looking statements  reflect the current views of
management  regarding  future  events,  and  involve  known  and  unknown risks,
uncertainties  and other factors that may  cause actual results to be materially
different  from  any  future  results,  performance or achievements expressed or
implied  by such statements.  There can be  no guarantee that  Novartis or Alcon
will  achieve any particular future financial  results or future growth rates or
that  Novartis  or  Alcon  will  be  able  to  realize  any potential synergies,
strategic  benefits or  opportunities as  a result  of the Alcon acquisition and
proposed  merger. Neither can there be any  guarantee with respect to the impact
of  the  proposed  transactions  on  the  Group?s  credit rating. In particular,
management's   expectations   could   be   affected   by,  among  other  things,
uncertainties   involved  in  the  development  of  new  generic  pharmaceutical
products;  unexpected  patent  litigation  outcomes;  unexpected  inabilities to
obtain  or  maintain  exclusivity  periods  for  developed  products; unexpected
regulatory  actions or  delays or  government regulation  generally; uncertainty
that  the two businesses will be  integrated successfully and that key personnel
will  be retained; uncertainties  that the cost  savings and any other synergies
from  the transaction may  not be fully  realized or may  take longer to realize
than  expected;  disruption  from  the  transaction  making it more difficult to
maintain  relationships with  customers, employees  or suppliers; competition in
general;  government, industry, and  general public pricing  and other political
pressures;  the  impact  that  the  foregoing  factors  could have on the values
attributed  to the  Group's assets  and liabilities  as recorded  in the Group's
consolidated  balance sheet; and other risks and factors referred to in Novartis
AG's  current Form 20-F on file with  the US Securities and Exchange Commission.
Should  one  or  more  of  these  risks  or uncertainties materialize, or should
underlying  assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated or expected. Novartis
is  providing the information in this media release as of this date and does not
undertake  any obligation to update  any forward-looking statements contained in
this  media release as a result of  new information, future events or otherwise.

Additional                         US-related                        information
Novartis  expects to file  a registration statement  relating to the merger with
the  SEC. The registration  statement will contain  a prospectus relating to the
shares  to  be  issued  in  the  merger.  Such prospectus will contain important
information  about Novartis,  Alcon, the  merger and  other matters.  Holders of
Alcon  shares who are US persons or who are  located in the US are urged to read
the  prospectus and  other documents  that would  form part of such registration
statement  when it  becomes available.  Such prospectus  and any  other relevant
documents filed by Novartis with the SEC will be available free of charge at the
SEC's         website        www.sec.gov        and        from        Novartis.

About                                                                   Novartis
Novartis  provides  healthcare  solutions  that  address  the  evolving needs of
patients  and  societies.  Focused  solely  on  healthcare,  Novartis  offers  a
diversified   portfolio   to   best  meet  these  needs:  innovative  medicines,
cost-saving  generic pharmaceuticals, preventive  vaccines, diagnostic tools and
consumer health products. Novartis is the only company with leading positions in
these  areas. In 2008, the  Group?s continuing operations  achieved net sales of
USD  41.5 billion  and  net  income  of  USD 8.2 billion. Approximately USD 7.2
billion  was invested in  R&D activities throughout  the Group. Headquartered in
Basel,  Switzerland,  Novartis  Group  companies  employ  approximately  99,000
full-time-equivalent  associates and  operate in  more than 140 countries around
the    world.    For    more    information,please    visit    www.novartis.com.

[1]  Under terms of  April 2008 agreement with  Nestlé, the call option exercise
price  is USD  181 per share  for approx.  152 million shares and USD 143.18 for
approx.    4 million    shares,    resulting    in    an    average   price   of
USD  180 per share for  the approx. 156 million  shares comprising the 52% Alcon
stake.
[2]  Core earnings exclude acquisition-related costs such as the amortization of
intangible     assets    and    certain    non-recurring    exceptional    items

                                     # # #
Novartis Media Relations

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NOVARTIS AG CHF0.50(REGD)
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    Media release (PDF): http://hugin.info/136453/R/1369789/334982.pdf
    Alcon - backgrounder - January 2010: http://hugin.info/136453/R/1369789/334983.pdf