Alcon IDC earmarks $50M for possible Novartis suit

Alcon's (NYSE: ACL) independent directors are upping the ante in their squabble with Novartis. The directors committee (IDC) has now set up a $50 million litigation trust to make sure that minority shareholders get a good deal in selling their shares to the Swiss drugmaker, Reuters reports.

Novartis agreed to buy Nestle's Alcon stake in a two-stage deal. The second stage is underway, and when the transaction closes, Novartis will own 77 percent of the eye care company, at a price of $39.3 billion, or some $168 per share.

But in offering to buy out the remaining 23 percent of the company, Novartis bid $138 per share. And that price didn't please the directors' committee. The IDC has since advanced legal and ethical arguments for a higher price. Most recently, it engaged a legal expert to look at the deal, and that expert said that the minority-share buyout would require the IDC's approval.

So far, Novartis hasn't been forthcoming; it's repeatedly said its offer is fair and perfectly legal, and all it needs to effect the transaction is a two-thirds majority on the board. But the company may have to boost its bid nonetheless, analysts say. According to Helvea's Karl-Heinz Koch, "The real sensitivity is that Novartis cannot afford to upset management and the employees of Alcon given that it lacks critical expertise in the intra-ocular lens market, which represents the majority of the Alcon purchase price."

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