RiskMetrics Group, Inc. (Ann Arbor, Mich.), a risk management and corporate governance firm, has voiced concerns about the adequacy and legality of the merger proposal by Novartis (Basel, Switzerland) to minority shareholders of Alcon (Fort Worth, Texas), Alcon said in a press release.
The questions of legality pertain to any attempt by Novartis to “unilaterally impose a full takeover on Alcon,” Alcon said in the release. RiskMetrics also found that the proposal is in breach of best practices for mergers and acquisitions.
The findings of RiskMetrics group largely echoed those of the Alcon Independent Director Committee, which previously concluded that the Novartis proposal is “grossly inadequate,” Alcon said in the release.
On January 4, 2010, Novartis announced it would buy Alcon for about $180 a share from majority stockholder Nestle. Novartis already owned 25% of Alcon; with Nestle’s share, Novartis would then own about 77% and planned to buy the remaining 23% for about $147 a share, the companies reported.
RiskMetrics determined that premiums paid on standard squeeze-out transactions were on average 18.0% and 23.8% above the one-day and four-week target price, respectively, as compared to the Novartis proposal, which offered a discount of 7.0% and 5.0%, respectively. RiskMetrics disputed Novartis’ claims that Alcon’s stock was trading with takeover speculation. The risk management firm also noted that the price Nestle negotiated for its stake two years ago is “to a large extent irrelevant to minority shareholders,” who are now faced with a different price.