January 4, 2010 1:01 PM

Wachtell, Cravath, S&C and A&O Lead on Mammoth Novartis Deal

Posted by Zach Lowe

Wachtell, Lipton, Rosen & Katz and Allen & Overy advised the Swiss drugmaker Novartis on its $28 billion acquisition of a majority stake in Alcon, the world's largest eye-care company, according to the firms and sources familiar with the deal. 

Cravath, Swaine & Moore advised Nestlé. The company owned all of Alcon from 1977 through 2002; it will have multiplied the value of its investment in the eye-care company by about 100 times with today's sale of the 52 percent stake of the company it still owned, according to Bloomberg. 

The deal is actually the second stage of a larger transaction originally struck in spring 2008, according to Bloomberg, The New York Times, and lawyers who worked on the deal. In that transaction, Novartis purchased a 25 percent stake in Alcon for about $10.4 billion, according to the NYT. The deal gave Novartis a call option to purchase Nestlé's remaining 52 percent stake, and Novartis is exercising that option today, according to company statements. 

Allen & Overy advised Novartis on the original 2008 deal; Thomas Werlen, general counsel at Novartis, is a former A&O partner. Daniel Cunningham, the partner who led the A&O team on the 2008 deal, left for Quinn Emanuel Urquhart Oliver & Hedges last year, but A&O maintained a cocounsel role for Novartis in its decision to exercise the call option today, a firm spokesperson says. Eric Shube led the A&O team on the new transaction; Shube did not return a call seeking comment.

Wachtell joined A&O in representing Novartis as cocounsel on exercising the call option, an A&O spokesperson confirms. Wachtell did not have a role on the original Novartis-Alcon deal, according to The American Lawyer's reporting on that transaction. Andrew Brownstein and Trevor Norwitz, the lead Wachtell partners on the deal, declined to comment.

Wachtell does have a history with Novartis. The firm served as cocounsel, with Shearman & Sterling, in advising Novartis on its move to purchase two generic drug companies for over $8 billion in 2005, according to the New York Law Journal.

Cravath reprised its role advising Nestlé in the transaction. Cravath partner Robert Townsend III led the firm's team on the deal; he declined to comment when we reached him today. 

Sullivan & Cromwell is advising an independent committee of Alcon directors considering the last prong of Novartis's would-be takeover of Alcon: Its offer to exchange $11.3 billion of Novartis shares for the 23 percent stake in Alcon currently held by minority shareholders. (Nestlé sold that chunk in an initial public offering in 2002.) That offer values each Alcon share held by that group of shareholders at about $153 per share, slightly lower than the $180 per share Nestlé received in selling its 52 percent stake, according to Bloomberg. 

Keith Pagnani is the leading S&C partner advising the Alcon board on the proposed share exchange, which requires the approval of the Alcon board, according to a company statement. Pagnani did not return a call seeking comment.

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