* Legal expert says Alcon board needs support of directors
* Alcon independent director committee repeats offer too low
* Novartis may need to up bid or drop full merger - analyst
* Novartis shares down 0.3 percent, Alcon little changed
(Releads, updates shares)
By Katie Reid
ZURICH, June 28 Swiss drugmaker Novartis AG
NOVN.VX could have to raise its buyout bid for Alcon ACL.N
after a law academic advised Alcon's independent directors'
committee (IDC) that their approval was needed for a deal.
Novartis agreed to buy a majority of Alcon from Nestle
NESN.VX and has made what Alcon's independent directors regard
as a lowball offer, originally worth $11.2 billion but dependent
on share price moves, for the remaining 23 percent.
"The Alcon board will not be able to validly decide on
Novartis' merger proposal without the IDC's prior recommendation
of that proposal," Professor Hans Caspar von der Crone was
quoted as saying in a statement from the IDC.
Kepler Capital Markets analyst Tero Weckroth said in a note
on Monday: "After this news, it looks increasingly likely that
Novartis will need to either increase its bid for the remaining
shares or, alternatively, drop plans for a full merger."
Alcon's independent directors have repeatedly dismissed the
original Novartis bid as inadequate and warned key personnel
could leave the U.S. eyecare group due to the offer.
Novartis's bid was pitched in stock and equates to about
$137 per Alcon share at latest prices. The U.S. group's stock
was trading at $151.55 at 1420 GMT on Monday. Novartis shares
were trading down 0.3 percent at 53.05 Swiss francs ($48.80).
"While we continue to hope that we can reach a negotiated
deal, Professor von der Crone's legal opinion makes clear that,
regardless of Novartis' ultimate course of action, the IDC's
recommendation is a mandatory step prior to the consummation of
Novartis' merger proposal," Thomas Plaskett, chairman of the
Novartis, which is seeking to use the acquisition to
insulate itself against losing patent protection on treatments
such as top-selling blood pressure drug Diovan, was not
immediately available to comment.
"Alcon Independent Board of Directors are stepping up their
game to make life more complicated for Novartis. The IBD have
gained a key opinion leader in the area of Swiss Merger law to
support their case," Vontobel analyst Andrew Weiss said.
"Following the Nestle transaction, expected in July/August,
giving Novartis a 77 percent stake in Alcon, Novartis will need
to resolve some legal issues before merging with the remaining
Alcon shares," he said.
Novartis, which bought 25 percent of Alcon in 2008, agreed in
January to buy another 52 percent of the group, taking its
holding to 77 percent for a combined price of $39.3 billion. It
paid Nestle an average of $168 per Alcon share.
Alcon was bought by Nestle in 1977 for $280 million and is
the global leader in ophthalmic surgery products, particularly
for cataract operations, and also produces contact lens products
and medicines for eye diseases such as glaucoma.
(Editing by Will Waterman)
($1=1.087 Swiss Franc)