Investors have more reason to hope that Novartis will beef up its offer for the outstanding shares of Alcon. That's because the drugmaker's shares have been on the wane lately. And because the Alcon deal would be a share swap, every time Novartis stock drops, so does the value of the bid. Furthermore, Alcon's minority shareholders weren't thrilled with the offer to begin with.
At the time Novartis made its pitch for the minority interest in Alcon remaining after it bought out Nestle's 77 percent share, the Swiss drugmaker's offer was worth $153 per Alcon share. Now, according to MarketWatch, it's worth $147.53. That's a decline of 3.4 percent, and 7.8 percent less than Alcon's closing price on Tuesday.
Not to mention the fact that it's much less than what Novartis paid to get Nestle's shares in a two-part transaction. The most recent deal--for a 52 percent block of shares--will close at $180 per share. Novartis Chairman Daniel Vasella has said that the higher price reflects the fact that this block of shares gives Novartis control of Alcon.
But Alcon's independent directors have trounced the bid, even calling it disrespectful to some of the minority shareholders who happen to also be longtime employees of the company. As MarketWatch points out, the corporate governance group RiskMetrics calculates that other squeeze-out deals like this one typically were done at 23 percent premiums, rather than a 5 percent discount. Will Novartis raise its bid now?
- read the MarketWatch piece