The Alcon’s Independent Director Committee, in response to comments made by Novartis, stated its belief that Alcon has established certain important protections for the benefit of its minority shareholders against a coercive takeover bid, and is disappointed that Novartis is attempting to circumvent those protections and corporate governance best practices.
Reportedly, following Novartis’ initial purchase from Nestle of an approximately 25% stake in Alcon, the Alcon Board of Directors recognized the need for the establishment of a standing committee of independent directors whose stated purpose is to protect the minority shareholders in connection with a number of transactions, including related party transactions between Alcon and major shareholders of Alcon. This action was approved by the full Alcon Board of Directors in December 2008.
Novartis appears to be attempting to circumvent the minority protection principles embodied in the actions noted above by claiming that the Alcon minority shareholders are neither accorded minority protections under the Swiss Takeover Code nor the rules under the NYSE.
Assuming that the Novartis and Nestle board representatives along with the Alcon executive board representative abstain, approval by the independent directors comprising the Independent Director Committee would be required to approve a merger with Novartis.
Novartis has expressed views that, if it were unable to obtain the required approval of the Alcon Board of Directors and the Independent Director Committee, it would wait until it owned 77% of Alcon to then unilaterally impose the terms of the proposed merger on the minority shareholders.
While Novartis has expressed its view that the merger proposal is fair, the Independent Director Committee and its advisors will inform the Alcon shareholders of its formal position once the Committee and its advisors complete their evaluation.