Novartis has agreed to exercise its call option to buy the remaining 52% of Alcon shares from Nestle SA (Nestle). The companies agreed upon the call option in 2008 when Nestle sold 25% of its stake in Alcon to Novartis. The acquisition of Alcon will complement Novartis eye-care business. As the two companies fit strategically, we expect this acquisition to produce synergies, going forward, and hence, do not anticipate a change in our current BUY rating for the ADR. We will reassess our target price and rating in our 4Q 09 update report. We maintain our HOLD rating for the Swiss stock based on our anticipation of a negative currency impact on the Swiss stock over our 6-12 month investment horizon. We will reassess our target price and rating in our 4Q 09 update report.

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