Full Press Release Details
Independent Director Committee Determines Novartis' Merger Proposal to Minority
Shareholders of Alcon is Grossly Inadequate
HUENENBERG, Switzerland - January 20,
2010 - The Independent Director Committee (the "Committee") of Alcon, Inc. (NYSE:
announced that it formally responded to the January 4 proposal from Novartis AG
("Novartis") to attempt to acquire the minority publicly traded shares of Alcon
pursuant to a compulsory merger under Swiss law. In its letter to Dr.
Daniel Vasella, Chairman and CEO of Novartis and an Alcon Board member, the
Committee stated that based on, among other things, advice from its independent
financial advisor, it had determined that the price and other terms proposed by
Novartis are grossly inadequate and that the financial analysis upon which
Novartis' unilateral proposal is based is fundamentally flawed.
Committee also announced 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.
Committee reached this decision after a careful review of the terms and
financial aspects of Novartis' proposal and analysis of information provided by
Alcon and its senior management team about the company's past and anticipated
financial performance, growth prospects and merger synergy
opportunities. The Committee worked closely with its independent
financial and legal advisors, Greenhill & Co., Sullivan & Cromwell LLP
and Pestalozzi, Zurich, in undertaking its analysis.
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.
Plaskett, Chairman of the Committee, said, "The Committee strongly believes that
the underlying historical record and Management's expected future financial
performance of Alcon justify a significantly higher price than that reflected in
the current proposal by Novartis. Moreover, minority shareholders
have rights accorded to them that must be respected."
added, "We understand and are concerned that the current situation is
disconcerting to the highly valuable employee asset base at Alcon, many of whom
are shareholders, and we appreciate their continuing hard work and dedication as
we work through these issues at the Board level."
Committee believes that the financial methodology used by Novartis intentionally
ignored Alcon's documented market and operational performance, including Alcon's
history of trading at a premium valuation compared to its peers. The
market has consistently recognized and awarded Alcon a premium for its
attractive fundamentals, industry leadership and outperformance of quarterly
earnings expectations 26 out of 29 times since its 2002 IPO.
Committee also recognizes that the price offered to public shareholders is
substantially lower than that which will be paid to Nestl for the controlling
stake, which is virtually unprecedented in the recent history of similar
Committee also reiterates its disappointment with Novartis' public implication
that Novartis can essentially force Alcon's minority shareholders to accept the
terms of its proposal. In fact, the Committee believes that Swiss law
and Alcon's Organizational Regulations specifically protect minority rights by
requiring that a committee of independent directors approve a proposed merger
with a majority shareholder. The Committee believes those rights were
reaffirmed and strengthened by Alcon's full board of directors as recently as
December 2008 when, following Novartis' initial purchase from Nestl of an
approximately 25 percent stake in Alcon, the Alcon Board of Directors approved
the formation of a standing committee of independent directors whose stated
purpose is to protect the minority shareholders. Dr. Vasella, the
Novartis representative on the Alcon Board, was a board member at the time and
approved the formation of the Committee.
continued, "Advocates of sound corporate governance and well-established
principles of fairness and equity in both Switzerland and the U.S. 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."
Committee also believes that Swiss law and Alcon's organizational documents
require directors to recuse themselves from decisions on which they are
conflicted, which means that the non-independent Novartis-appointed directors
would be required to abstain from any Alcon Board decision as to whether or not
to approve Novartis' merger proposal. Likewise, conflicted directors
would also be required to abstain from voting with respect to the replacement of
any Committee members and any other action taken with the purpose of
circumventing the authority of the truly independent Committee members to accept
or reject the merger proposal.
Committee has posted additional information including answers to frequently
asked questions, a summary of its financial analysis, and links to the Swiss
Code of Obligations, the Swiss Merger Act and the Alcon Organizational
Regulations on their Web site: www.transactioninfo.com/alcon.
Conference Call / Webcast
Committee will host a conference call and webcast for Alcon investors on
Wednesday, January 20 at 8:30 am Eastern Time. The conference call
can be accessed at +1 866 831 6272 (domestic) and +1 617 213 8859
(international). The participant passcode is
webcast can be accessed on the investor relations section of Alcon's Web site
of the conference call will also be available for one week. The
replay dial-in number is +1 888 286 8010 (domestic) and +1 617 801 6888
(international). The replay passcode is 52559963.
Lipin/Jennifer Lowney
Group (212) 333-3810
following letter has been sent to Dr. Vasella:
Dr. Daniel Vasella, Chairman and CEO
writing to you on behalf of the Independent Director Committee (the "Committee") of the
Alcon, Inc. ("Alcon") Board of
Directors in response to the January 4th proposal by Novartis AG ("Novartis") to attempt
to squeeze-out Alcon's minority shareholders in a compulsory merger in which