Alcon Independent Director Committee slams Novartis offer as 'grossly inadequate, offensive and disrespectful'

Responding formally to Swiss drug major Novartis' offer to buy the global eye-care leader (The Pharma Letter June 4), the Independent Director Committee of Alcon lambasted the deal proposed to independent shareholders, which was significantly lower than that made for a majority stake to be acquired from food giant Nestle, using terms such as 'grossly inadequate, offensive and disrespectful' to describe the terms.

The Committee stated that based on, among other things, advice from its independent financial advisor, it had determined that the price and other terms proposed by Novartis are grossly inadequate and that the financial analysis upon which Novartis' unilateral proposal is based is fundamentally flawed. Novartis's offer to these stockholders was on the basis of $153 per share, compared with $180 to Nestle. Moreover, as of January 19, 2010, the proposal is valued at $151.43 per Alcon share due to the decline in Novartis' stock price, the Committee noted.

The Committee also announced that the coercive tactics deployed by Novartis are offensive and demonstrate a profound disrespect for Alcon's minority shareholders, many of whom are employees who, for more than 60 years, created the value in Alcon. The Novartis proposal would inequitably and unfairly distribute that value to its two largest shareholders, which is neither befitting a company of Novartis' stature nor equitable to the Alcon shareholders, many of whom have been long-term investors since the initial public offering in 2002. The Committee notes that Alcon employees are one of the largest minority shareholders.