Directors representing minority shareholders who are fighting against the terms of Novartis’ takeover bid of Alcon have created a $50 million trust to held fund any legal battles it may have with 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. That offer, which has now dropped to about $138 per share, caused uproar and Alcon’s independent director committee has continually expressed its opposition to the deal.

However, Novartis has shown no signs of upping its offer and believes that legally it will be able to push through the acquisition once it takes majority control from Nestle later this summer. In response, a couple of weeks ago, the IDC quoted a legal expert as saying that Swiss law is on the minority shareholders’ side.

Thomas Plaskett, chairman of the IDC, said Novartis' merger proposal is “not only grossly inadequate to the minority shareholders of Alcon, which include its valuable employees, but also creates considerable legal uncertainty”. This could “very likely result in significant litigation costs and delays in achieving merger synergies for both companies in the absence of a negotiated transaction,” he added.

Mr Plaskett went on to say that given the Basel-headquartered firm’s “actions and statements to date, we unfortunately can ill-afford to assume that Novartis will voluntarily honour the fair process contemplated by Alcon's organisational documents, Swiss law and established principles of good corporate governance”. He concluded by noting that “we felt that it is necessary to take this step now to help ensure that the fair process is observed”.

Novartis has not commented but Karl-Heinz Koch at Swiss broker Helvea, said that it may have to increase its bid. Speaking to Reuters, the analyst said that “the real sensitivity is that Novartis cannot afford to upset management and the employees of Alcon given that it lacks critical expertise in the intra-ocular lens market, which represents the majority of the Alcon purchase price”.