Alcon Inc. |ACL
Novartis AG |NVS

Deal value $45.2 billion

Spread 02/01/10 -$5.35, or -3.4%

Alcon Inc. may be encountering a scenario similar to Genentech Inc.'s lengthy buy-in by Roche Holding AG last year. The Genentech deal, which stemmed from Roche's option to acquire the biotech company, mirrors the Novartis AG move to buy in eye-care company Alcon, particularly because of the likely standoff with the Alcon special committee.

Novartis picked up an option Jan. 4 to buy the 52.2% of Alcon owned by Nestlé SA for $180 per share, or about $28.1 billion. Novartis already owns 24.8% of Alcon from a July 2008 deal that resulted in Alcon forming an independent committee charged with addressing any future takeover attempt by the pharma. Now Novartis proposes a stock exchange of 2.8 of its shares for each share of Alcon, about $150.15, totaling some $10.3 billion. Novartis has claimed that if Alcon's independent committee does not approve its offer, it can force the deal on minority shareholders when it controls the company after closing on the Nestlé deal.

The Alcon committee says it has a legal strategy if Novartis tries to circumvent the committee. But it has made it clear that it wishes to avoid a lengthy, risky battle with Novartis to come to a negotiated conclusion.

Arguments over valuation and currency (Nestlé is selling for cash) have also become public.

Roche substantially ignored the Genentech special committee while testing the interest of the larger Genentech shareholder base and then bought the committee's recommendation with a sweetener. Novartis could, after buying the Nestlé stake, name additional independent directors to sway the board vote, re-creating yet another aspect of the Genentech scenario.

BJ Services Co. |BJS
Baker Hughes Inc. |BHI

Deal value $6.3 billion

Spread 02/01/10 11 cents, or 0.5%

Baker Hughes Inc. entered a timing agreement with antitrust regulators regarding the close of its $6.3 billion acquisition of BJ Services Co.

The oil services company agreed not to close the deal before March 6. The competitive overlap between the two may be in chemical services, an area that has other large competitors. Baker Hughes expects the antitrust review to determine the timing of the merger process, as opposed to the Securities and Exchange Commission proxy review, which could clear soon and allow for shareholder votes by early March.