Alcon's minority shareholders have tossed a big obstacle in Novartis' path. The investors have filed a class-action lawsuit to slow down the Swiss drugmaker's takeover of the company and force Novartis to pay more for their shares.
Novartis has been working on an Alcon deal since last year, when it agreed to buy a portion of Nestle's stake in the eye-care company. As the new year opened, the second stage of that deal--Novartis buying the rest of Nestle's stake--began. And when it announced that development, Novartis also offered to buy out the remaining Alcon shareholders, all 23 percent worth. The only catch: The price for their shares was 18 percent lower than what Novartis would pay for Nestle's.
So that's the minority shareholders' beef. Alcon's board has taken their part, too, wasting no time in calling Novartis out for that lower offer. Analysts have said that Novartis may need to up the price to make the deal happen. But Novartis says it's within its rights; the lower price suffices, because those shares don't bring control of the company, the drugmaker says. Once it owns the entire 77 percent once held by Nestle, it can force the minority holders to make a deal, Novartis adds.
Hence the lawsuit: The minority holders assert that Novartis doesn't have that right. They claim they're "being squeezed out at an unfair price," the Associated Press quotes. Novartis refused to comment. We'll have to wait and see what happens in court.
- get the Shareholders Foundation's statement
- read the AP story