Alcon, Inc., the eye care products company of Huenenberg, Switzerland and with U.S. operations based in Fort Worth, TX, has announced that its Independent Director Committee (reviewing Novartis offer of merger--see DM 11192) believes that Novartis is "attempting to circumvent" protections Alcon had established for its minority shareholders against a coercive takeover bid. The Committee says it is disappointed over Novartis' actions.

According to a press release on the Alcon website, the protections include Article V, Section 5 of Alcon's Organizational Regulations, requiring approval by a committee of independent directors (as defined under the New York Stock Exchange rules) in connection with certain transactions, including any proposed merger with a majority shareholder.

The Committee stated that Novartis appeared to be attempting to circumventing the minority protection principles through its claim that Alcon minority shareholders are neither accorded minority protections under the Swiss Takeover Code nor NYSE rules.

The Committee points out that Swiss corporate law requires a merger proposal to be approved by a majority of the Alcon Board of Directors with "interested" directors abstaining. If, the Committee said, Novartis and Nestle board representatives and Alcon executive board representative abstain under such circumstances, the independent directors comprising the Independent Director Committee would be required to approve a merger with Novartis.

The press release further states that during an investor conference call, Novartis had suggested that if it could not obtain the required approval of the Alcon Board of Directors and the Independent Director Committee, the company would wait until it owned 77 percent of Alcon to then unilaterally impose the terms of the proposed merger on the minority shareholders. The Committee stated that "Such a unilateral action would clearly be inconsistent with the minority protection principles upon which Alcon established itself and Alcon shareholders rely."

The Independent Director Committee and its advisers have reiterated that they will inform Alcon shareholders of its formal position once they have complete their evaluation of the proposed merger.

Adapted from an Alcon press release.

The Alcon press release:

http://invest.alconinc.com/phoenix.zhtml?c=130946&p=irol-newsArticle&ID=1370521&highlight=

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