1. Speculate as to why Novartis acquired only a 25% ownership stake in Alcon in 2008.
2. Why was the price ($181 per share) at which Novartis exercised its call option in 2010 to increase its stake in Alcon to 77% so much higher than what it paid ($143 per share) for an approximate 25% stake in Alcon in early 2008?
3. Alcon and Novartis shares dropped by 5% and 3%, respectively, immediately following the announcement that Novartis would exercise its option to buy Nestle´’s majority holdings of Alcon shares. Explain why this may have happened.
4. How do Swiss takeover laws compare to comparable U.S. laws? Which do you find more appropriate and why?
5. Discuss how Novartis may have arrived at the estimate of $137 per share as the intrinsic value of Alcon shares. What are the key underlying assumptions? Do you believe the minority shareholders should receive the same price as Nestle´? Explain your answer.

In December 2010, Swiss pharmaceutical company Novartis AG completed its drawn-out effort to acquire the remaining 23% of U.S.-listed eye care group Alcon Incorporated (Alcon) that it did not already own for $12.9 billion. This brought the total purchase price for 100% of Alcon to $52.2 billion. Novartis had been trying to purchase Alcon’s remaining publicly traded shares since January 2010, but its original offer of 2.8 Novartis shares, valued at $153 per Alcon share met stiff resistance from Alcon’s independent board of directors, which had repeatedly dismissed the Novartis bid as “grossly inadequate.”