When Novartis took a stake in Nestle SA’s ocular drug business, Alcon, it clearly had larger intentions. The original contract stated that as of January 1, 2010, Novartis had the option to buy out the rest of Nestle’s stake and take full control of the company’s massive eye care business.
Novartis took advantage of that clause on Monday, placing a $39 billion bid to purchase the kit and caboodle of Alcon. Novartis CEO Daniel Vasella’s game plan is to merge Alcon with his company’s Ciba Vision subsidiary.
However, Alcon’s independent director committee doesn’t seem as enthusiastic about the deal. The group of minority shareholders stated, on Monday, that they were protected against hostile takeovers, and were rather miffed that Novartis would try to bully them out of ownership.
They claim that Swiss law gives the board the right to vote on the proposal, and that parties with a vested interest in the negotiation must abstain from the vote. In a nutshell, that means that the largest block of representatives on the board of directors, Nestle and Novartis, can’t have a say.
“Novartis expressed its view [to investors] that if it were unable to obtain the required approval of the Alcon board of directors and the independent director committee, Novartis would simply wait until it owned 77 percent of Alcon to then unilaterally impose the terms of the proposed merger on the minority shareholders,” the independent board stated on the Alcon site. “Such a unilateral action would clearly be inconsistent with the minority protection principles upon which Alcon established itself, and [upon which] Alcon shareholders rely.”
Novartis has yet to respond to the board’s statements, but analysts believe that the company might raise its bid.