Novartis sees Alcon purchase closing in H2

ZURICH (Reuters) - Novartis AG (NOVN.VX) expects to close its buy of a majority stake in U.S. eyecare group Alcon ACL.N in the late third quarter or fourth quarter, paving the way for it to take full control of the group.

Novartis, which agreed to buy a majority of the company from Nestle (NESN.VX), also announced proposals on Wednesday to elect five directors to the Alcon board to replace those nominated by Nestle, taking a key step to ensuring the majority-stake transaction is completed.

The directors nominated by Novartis are Enrico Vanni, Norman Walker, Paul Choffat, Urs Baerlocher and Jacques Seydoux.

The Swiss drugmaker is also seeking to snap up the remaining 23 percent stake, but has met strong resistance from the Alcon Independent Director Committee, which has dismissed Novartis's offer for the stake as inadequate.

Novartis has made what the Alcon independent directors regard as a low-ball offer, originally worth $11.2 billion but dependent on share price moves, and Novartis may have to raise its buyout bid after a legal academic said this week the committee's approval was needed for the deal.

But a spokesman for Novartis said it still felt its offer was fair when the unaffected share price of Alcon was taken into consideration.

Novartis's bid was pitched in stock and equates to about $137 per Alcon share at latest prices. Alcon's stock closed on Wednesday at $148.19, while Novartis shares closed at 52.60 Swiss francs.

Novartis, which bought 25 percent of Alcon in 2008, agreed in January to buy another 52 percent, which would bring its stake to 77 percent for a combined price of $39.3 billion. It paid Nestle an average of $168 per Alcon share.

Novartis is hoping to push through the buy of the remaining stake under Swiss law once it secures regulatory approval and closes its acquisition of the majority stake in the second half of the year.

Swiss mergers require approval of two-thirds of shareholders and a simple board majority.

The Independent Director Committee said in a statement on Wednesday that any Alcon board member whose election had been proposed by Novartis would face a conflict of interest and would therefore not be allowed to vote on the merger.

"We would absolutely expect any director designated by Novartis and elected to the Alcon board of directors to abstain from any board action with respect to Novartis's merger proposal, just as Nestle has done for its part," Thomas Plaskett, chairman of the independent committee, said in the statement.

"Failure to do so would be a breach of Swiss corporate law, contrary to the principles of good corporate governance and could cause personal civil liability to such director," he said.

The spokesman for Novartis said the group was confident that the candidates it had nominated would be elected at the Alcon extraordinary general meeting on August 16, adding that other board members would be the ones to judge whether fellow board members were independent or not.

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.

(Reporting by Katie Reid; Additional reporting by Jessica Hall in Philadelphia; Editing by Phil Berlowitz)