Novartis’ bid to close its acquisition of Alcon is unlikely to be smooth as corporate governance experts have recommended that shareholders at the eyecare specialist should reject board candidates being proposed by the Swiss major.

Novartis is purchasing the 52% stake in Alcon owned by Nestle for $180 per share in cash, which will give it a 77% holding, but at the beginning of the year announced plans to buy out the 23% stake held by minority shareholders for much less, $153 per share, a figure that has since gone down.

Alcon’s independent director committee immediately opposed the deal and have brought in experts to check the legalities of Novartis plan. Now the IDC has quoted two proxy advisory firms RiskMetrics Group and Glass Lewis & Co who are calling for opposition to the five- board candidates proferred by Novartis.

Alcon shareholders will vote on the conditional election of Novartis' board designees at an extraordinary general meeting on August 16. RiskMetrics noted that “even though the outcome of the upcoming election is certain”, the minority shareholders' vote is likely to be seen as a ‘referendum’ on Novartis' takeover attempt.

RiskMetrics says Novartis has stated publicly that once it completes the Nestle transaction, it will be able to unilaterally approve a full take-over regardless of opposition from minority shareholders and that minority shareholder protections do not apply. It adds that Novartis' "characterisation of the proposed directors as ‘independent’ is an irrelevant answer to the wrong question”. They add that it leaves unanswered the "most meaningful question...why the election of five categorically-conflicted directors designated by the bidder would be in their best interests”.

The corporate governance group also argues that Novartis “has exacerbated concerns that it will take unilateral and coercive board manoeuvres to attempt to force through its merger proposal” and it concludes that "support for these Novartis designees is [not] in the best interest of minority shareholders" and recommends voting against them.

Glass Lewis echoes these sentiments and expressed concern at Novartis' attempt to “force an inequitable offer on minority shareholders by attempting to "take advantage of a legal loophole’.” It also concludes that granting Novartis a majority of board seats is “not in the interest of minority shareholders” and therefore recommends rejection as well.

Thomas Plaskett, chairman of the IDC, said “these are strong statements from leading independent corporate governance experts, and they are rightly concerned by Novartis' attempt to force a grossly inadequate offer on minority shareholders in blatant disregard of their rights to fair process and fair value”.