ZURICH (Bloomberg) — Novartis AG offered to buy the rest of Alcon Inc., the world's largest eye-care company, from Nestle SA and minority shareholders for about $39.3 billion, as chief executive officer Daniel Vasella expands into eye surgery.

Nestle will sell a 52 percent stake to the Basel, Switzerland-based drugmaker for an average of $180 a share, or a total of $28.1 billion, Novartis said yesterday. Novartis also offered to pay 2.8 of its own shares for each remaining Alcon share held by the public, equivalent to about $11.2 billion.

Novartis is exercising a call option the Swiss companies agreed to in April 2008. By buying Alcon, the maker of Opti-Free contact lens cleaners, Novartis expands a portfolio of eye-care businesses including Ciba Vision and the Lucentis blindness medicine. The drugmaker is counting on newer products to fuel growth as patents on the hypertension drug Diovan and the Gleevec leukemia treatment, its best sellers, start to expire in the U.S. in 2012.

"It's an excellent opportunity to acquire the world leader in eye care," Vasella said on a call with reporters. "Overall I think it's a great strategic fit and I'm very optimistic about the outlook of the business."

Novartis has spent at least $59 billion on acquisitions over the past five years, according to Bloomberg data. The Swiss company has purchased Chiron Corp., adding new vaccines, as well as Hexal AG and Eon Labs Inc. to expand in generic medicines.

Alcon got 46 percent of revenue from devices and products used in eye surgery in 2008. Its products also include treatments for eye infections and glaucoma, and machines used in cataract operations. The company had an operating profit margin of 35 percent in 2008 compared with Novartis's 22 percent.

Alcon's surgical business generated $2.9 billion in sales in 2008, while its pharmaceutical unit had revenue of $2.6 billion. Sales of consumer products such as eye drops and ocular vitamins amounted to $800,000.

Nestle divested a 25 percent stake in the company to Novartis in July 2008 for $10.4 billion. Nestle, the maker of Nescafe coffee, said today it will buy back 10 billion Swiss francs ($9.6 billion) of stock after selling the stake. The buyback signals that Nestle is unlikely to make a major acquisition such as Cadbury Plc in the immediate future, analysts said, though it has enough cash.

More Debt

Novartis had $14.2 billion of cash as of Sept. 30 and said today it will fund the purchase of Nestle's stake through available cash and external financing of as much as $16 billion in short- and long-term debt. Standard & Poor's in April 2008 lowered its long-term corporate rating on Novartis by three levels to AA-, citing the company's plan to borrow for the two- step Alcon purchase. Moody's cut Novartis two steps to Aa2.

The transactions to gain full control of Alcon aren't expected to affect the group's credit ratings, Novartis said.

Nestle sold 23 percent of Alcon in a 2002 initial public offering for $2.2 billion. Novartis is offering to buy out those shares, which trade on the New York Stock Exchange, for the equivalent of $153 apiece.