* Alcon independent director committee says offer inadequate
* Says Novartis analysis of Alcon share flawed
* To take all available actions to protect minorities
* Alcon shares rise nearly 1 pct, above offer price
* Novartis shares fall 0.5 pct
(Adds Alcon director comment, fair share price, updated shares)
By Katie Reid and Sam Cage
ZURICH, Jan 20 Novartis AG's NOVN.VX offer to
buy out minority shareholders in Alcon Inc ACL.N is "grossly
inadequate", independent directors of U.S. eyecare group said on
Wednesday, setting the stage for a prolonged battle.
Swiss drugmaker Novartis, which has a deal to buy a majority
of Alcon from Nestle SA NESN.VX, has made what Alcon's
independent directors regard as a lowball offer originally worth
$11.2 billion for the remaining 23 percent of Alcon.
"The analysis and numbers in the Novartis proposal are
grossly inadequate," Tom Plaskett, chairman of Alcon's
independent director committee, told Reuters.
Analysts have said Novartis, which is buying Alcon to
diversify and insulate against losing patent protection on big
selling medicines, such as blood pressure drug Diovan, is paying
too much and have criticised the deal's complicated structure.
The independent Alcon directors had been widely expected to
say the Novartis price was too low but, if necessary, the Swiss
group could simply replace the committee members to force
through a deal.
"It is their duty to defend the interests of the minority
shareholders," said David Kaegi, analyst at Swiss wealth manager
Sarasin, adding the Alcon directors' statement was no surprise
in that respect.
"I still think Novartis, at the end, will be forced to
better the offer, though it won't be higher than the blended
price of $168," Kaegi said.
Plaskett said he had spoken with minority shareholders and
the universal feeling was the Novartis offer was unfair. Alcon
staff and management, who own some 7 percent of outstanding
shares, could end up leaving the company as a result.
"They are very upset and disturbed that this proposal is a
cram down," he said. "I think it represents a great risk for
Novartis in terms of retaining key personnel."
The committee said it would "take all appropriate and
available actions to protect minority shareholders and prevent
unilateral removal of independent directors." Plaskett added he
was hopeful the dispute would end in a negotiated deal.
ALCON TRADING AT PREMIUM
Novartis is offering minority shareholders 2.8 of its own
shares for each outstanding Alcon share, equivalent to about
$149 per share at latest prices. Alcon rose 0.8 percent to
$154.64 by 1612 GMT.
Both are lower than the average $168 per share Novartis is
paying to buy the stake from Nestle and the $180 agreed for the
purchase of the second tranche of that deal. Novartis bought its
first 25 percent stake for $143.18 per share.
The directors calculated a fair Alcon share price,
unaffected by the Novartis bid, of $164.35, compared with
Novartis' assessment of $137.
Novartis, whose shares fell 0.5 percent to 55.70 Swiss
francs, was not available to comment.
Alcon, though listed in New York, is incorporated in
Switzerland, where the law does not require a squeeze-out of
minorities to be at the same price paid for the majority.
The directors called Novartis's tactics coercive and
disrespectful to minority shareholders, many of whom are Alcon
employees who have helped create the value in the company.
In a letter to Novartis chief executive Daniel Vasella,
independent committee member Thomas Plaskett said the Swiss
group had implied it could simply replace those directors once
it has completed buying Nestle's shares.
"It is important that you understand that the committee's
response today is only the first of potentially many steps that
the committee may take in the fulfilment of its obligations to
defend Alcon and the minority shareholders", Plaskett wrote.
(Additional reporting by Catherine Bosley; Editing by Will
Waterman and Louise Heavens)