As if Novartis didn't have enough problems with its Alcon buyout, now there's word that the deal could carry a tax burden. Apparently Alcon's U.S. shareholders might have to pay taxes on a swap of their shares for Novartis stock. If so, that would be another strike against Novartis' buyout of minority shareholders.
Novartis agreed to buy Nestlé's 77 percent of Alcon in a two-stage deal, and the second stage recently commenced. Along with announcing that development, Novartis offered to buy out the remaining 23 percent in a stock swap transaction. That's where the problem began; however, Novartis' offer for those minority shares was significantly less than what it would pay for Nestlé's stock. Alcon's board protested, the shareholders revolted--and then sued.
And now this. If there's one thing an investor hates more than a lower price for stock holdings, it's taxes. And as the Wall Street Journal's Deal Journal reports, 18 percent of Alcon's shares--that would be the lion's share of minority stock holdings--are owned by U.S. residents who could be subject to the tax.
- read the Deal Journal post