Stephen Rosenman's  Instablog

  Back in August, I advised investors to load up on Alcon (ACL), the eye care company because, this New Year's, Novartis (NVS) could be forced to buy all of Nestle's approximately 150 million at a $181 price. seekingalpha.com/article/157961-three-wa...
  In brief, Nestle's has the right as of January 1 to sell all of its 52% share of Alcon to Novartis for 20.5% above the average of the past  week price to a maximum of $181.  I speculated that minority shareholders could piggyback on the ride to $181.
  At that time, ACL was trading at $132.  Now ACL is $143.  The "magic" price to allow Nestle's to cash out at $181 is $150.  We have been moving slowly up to that critical point.
  Novartis has stated it has no intention to buy out any remaining shareholders should Nestle's exercise its option to sell.  However, the purchase of ACL by individual investors does not depend on NVS buying out their shares.  If NVS is forced to buy Nestle's shares at $181, all remaining ACL shares should rise as well.  The $181 becomes the de facto price.
   After markets closed, Alcon (ACL) delivered a superb quarter bringing in $1.71 a share, better than expected $1.44.  Last year's quarter earnings of $2.07 included a $0.79 tax benefit. Thus nonGAAP earnings this year were 33% higher.  Revenue rose from $1.5 billion to $1.6 billion.  The company raised guidance from $6.20 - $6.35 to $6.55 - $6.65 for year 2009.  Thus ACL accomplished four amazing feats: it beat estimates, increased nonGAAP earnings, boosted revenues, and raised guidance with no accounting gimmicks. Very few companies can say the same this quarter.
   The stock after hours is trading up at $149.
   The buy call has intensified.  We're closer to New Year's.  The company's fundamentals are more than sound.  ACL soon will be $181.