Those Are Fighting Words

"Grossly inadequate." "Offensive." "Demonstrate a profound disrespect."

Those are words you often hear hostile-takeover targets use to fight back against their aggressors. This time however, the authors might not have much of a platform to fight from.

As you can tell from the quotes above, Alcon's (NYSE: ACL  ) Independent Director Committee isn't too happy about the offer that Novartis (NYSE: NVS  ) made to merge Alcon into Novartis. At an exchange rate of 2.8 shares of Novartis for each share of Alcon, shares are valued at $151.43 based on yesterday's close -- down slightly from when Novartis made the offer earlier this month and well below the $180 Novartis is paying Nestle for its majority shares.

The problem is that Alcon's independent shareholders have only a minority stake in the company. Nestle owns 52% of the company, and once Novartis purchases that, it will have 77% of the company under its control. Unlike Cadbury's (NYSE: CBY  ) ability to fight off Kraft (NYSE: KFT  ) for a while and Facet Biotech's (Nasdaq: FACT  ) shunning of Biogen Idec's (Nasdaq: BIIB  ) low-ball offer, Alcon's shareholders just don't have much power. Novartis claims that it can make the lower offer under Swiss law.

In the end, I suspect Novartis will up the offer just to make the problem go away, but investors shouldn't expect the full $180 either. Nestle's premium price is a reward for giving Novartis full control of Alcon.

The only thing minority shareholders can offer is less paperwork if Novartis can fold Alcon's financial reporting into its own. Unfortunately for minority shareholders, that's only worth slightly more than the paper their fighting words are printed on.

Speaking of fighting back, Todd Wenning thinks now is the time to get defensive.