GENEVA (AP) -- A panel of directors at eye-care company Alcon Inc. on Wednesday rejected as "grossly inadequate" a $39 billion takeover bid by Swiss pharmaceutical giant Novartis AG.
The rejection by the committee -- made up of three independent board members -- follows a similar response from minority shareholders to Novartis' Jan. 4 announcement that it plans to pay $38.5 billion for the 77 percent stake in Alcon it does not already own.
"The committee has determined that the Novartis merger proposal is grossly inadequate," the panel said in a letter to Daniel Vasella, chairman and CEO of Novartis.
It said Novartis' analysis underlying its merger proposal was "fundamentally flawed" and "not in the best interests of Alcon and its minority shareholders."
Alcon set up the committee to evaluate the proposed merger based on financial and legal counsel. The deal also requires regulatory approval.
Novartis said it was buying Nestle SA's 52 percent stake for $28 billion in cash before carrying out a merger with Alcon that would give it control of the remaining 23 percent held by minority shareholders.
The minority shareholders then filed a class-action lawsuit in U.S. District Court in New York to prevent Novartis from completing the takeover.
The Basel-based drug maker had already purchased 25 percent of Alcon from Nestle in April 2008 for $11 billion, with the option of buying the food and drinks company's remaining stake at a later date.