Swiss drugmaker Novartis is pushing ahead with its contentious buyout of Alcon minority shareholders after completing its acquisition of stock from Nestle to get control of the U.S. eyecare group. Novartis, which now holds a 77% stake in Alcon and has a majority on the board, has been seeking to snap up the remaining 23% since exercising its option to buy Nestle's stake in January.

Alcon's independent director committee has, however, dismissed Novartis's offer for the minority stake as too low and repeated on Thursday it could take legal action in a bid to secure a better price.

Novartis is seeking to diversify and insulate itself against losing patent protection on big selling medicines, such as blood pressure drug Diovan, by  buying Alcon.

Alcon is the dominant player in the multi-billion-dollar intraocular lens market and is also No. 1 in cataracts - an area that is set to benefit from ageing populations.

Naming the Price

Novartis is offering Alcon minority shareholders 2.8 Novartis shares for each Alcon share - an offer that is about 15% lower than the average price of $168 it paid to Nestle in an all-cash deal worth $38.7 billion.

Novartis is banking on using Swiss law to help it push through the deal, but this path may not be as straightforward as it hopes and it could face a complicated legal battle to seal the deal. Novartis CEO Joe Jimenez said on a conference call on Thursday the group was sticking to its offer for the minority shareholders, which it has  described as "full and fair".

Jimenez said Novartis had not been able to reach common ground with the Alcon board over the value of the stake. "We are not in a hurry," he said. Some analysts believe Novartis will wait to see how its share price develops before it makes any changes to its offer and good news in its product pipeline, such as possible U.S. regulatory backing for its MS drug Gilenia, could lift its stock.

"We believe Novartis will ultimately have to improve its offer, probably to around $165 per share. Whether negotiated before or settled after the merger remains to be seen," said Vontobel analyst Andrew Weiss. "Improving the deal terms at Novartis's current share price to $165 per Alcon share, i.e. 3.3 Novartis shares for 1 Alcon share, would result in an additional dilution of roughly 1-2% for Novartis," he said.

Novartis said it sees about $200 million of potential annual pretax cost synergies as a result of this deal. This is expected to rise to around $300  million if Novartis is able to clinch the remaining 23% stake, Novartis has said.

Novartis also said it expected the acquisition of the 77% stake would show core earnings per share low single- digit and high-single digit  accretion in 2010 and 2011 respectively.

Nestle said it will substantially reduce its net debt position, which stood at 29.6 billion francs at the end of June, as an immediate result of the completed sale.