Nestle Case – Case Study Example

Nestle and Alcon-The Value of a Listing This paper explores two companies, Nestle a food company and Alcon, an eye-Care Subsidiary. This paper summarizes consolidated operations of Nestle and the four available options for listing Alcon Company. This paper discusses a brief history of each of the two companies and factors behind their successful business operations (Desai, Dessain & Sjaman 2006, p3). Alcon Company top management decided the company to be made public and hence listed in the stock market so that its value can be realized. This was after realizing that Alcon Company’s value was not at all recognized despite the Company’s successful business operations and growth. The company contributed to 5% total sales of Nestle Company despite its relative small size (Desai et al., 2006, p4). Finally, the paper discusses Alcon’s Impact on Nestlé’s Financing (Desai et al., 2006, p4)
Key words: Nestle, Alcon, Listing
Nestle and Alcon-The Value of a Listing
Nestle Company was founded in 1866 by a pharmacist Henri in the city of Vevey, Switzerland. The first product which was produced by the company was an infant formula intended for mothers who were unable to breast feed (Desai et al., 2006, p2). Since the company was very successful, it started its operations in other European countries. The growth and expansion of the company has been greatly attributed to numerous acquisitions. For example, in 1905, Nestle Company merged with Anglo-Swiss Condensed Milk Company (Desai et al., 2006, p2).
Alcon Company was founded way back in 1945, in Texas, Fort Worth City. The company was founded by two brothers who were pharmacists, William and Robert, and the company was then specializing with ophthalmic products. In 1977, Alcon Company was wholly acquired by Nestle from New York Stock Exchange. In the year 2000, Alcon Company had net earnings of $331 million on sales of $2.5 billion (Desai et al., 2006, p3). This made the company to become a world leader in ophthalmology products for that year. The success in the company was attributed to commitment in research and development, and stability and longevity of its top management.
CEO of Alcon, Brabeck had proposed to the management of Nestle Company to list Alcon Company so that its value would be recognized by the whole financial world. This was after Alcon Company sales contributed to more than 5% of total sales of Nestle Company (Desai et al., 2006, p4). The top management of Nestle Company considered the following options of where to list Alcon Company: American Depository Receipt issue, a US listing, and dual listing in both US and Switzerland or Swiss listing. The question that remained unanswered was to where to list and the price of listing (Desai et al., 2006, p 6-7).
This is a decision based case study since the top management of Nestle Company had to decide where to list Alcon Company and the listing price of the company.
Mihir A. Desai, Vincent Dessain & Anders Sjoman (2006, April 26). Nestle and Alcon- The Value of a Listing. Harvard Business School.