Alcon spurns Novartis proposals as grossly inadequate

Alcon's formal response to Novartis' s proposal to acquire the minority publicly traded shares of Alcon. In a letter to the CEO of Novartis the Alcon Committee said that the terms proposed were “grossly inadequate.”

The Committee also said that the coercive tactics deployed by Novartis are offensive and demonstrate a profound disrespect for Alcon’s minority shareholders, many of whom are employees who, for more than 60 years, created the value in Alcon. The Novartis proposal would inequitably and unfairly distribute that value to its two largest shareholders, which is neither befitting a company of Novartis' stature nor equitable to the Alcon shareholders, many of whom have been long-term investors since the initial public offering in 2002. The Committee notes that Alcon employees are one of the largest minority shareholders.

Novartis proposed acquiring Alcon shares at a price of 2.8 shares of Novartis for each share of Alcon through a compulsory merger transaction. As of January 19, 2010, the proposal is valued at $151.43 per Alcon share due to the decline in Novartis' stock price, significantly below the $180 in cash that will be paid by Novartis to acquire its majority position.

The Committee also reiterated its disappointment with Novartis' public implication that Novartis can essentially force Alcon' s minority shareholders to accept the terms of its proposal.

Thomas G. Plaskett, Chairman of the Committee said: “Advocates of sound corporate governance and well-established principles of fairness and equity in both Switzerland and the US are rightly offended by Novartis' coercive attempts to take advantage of the Alcon minority shareholders. The Committee will evaluate and take all appropriate and available steps to ensure that the rights of Alcon' s minority shareholders are not trampled on in the manner proposed by Novartis.”