At a signing ceremony in Zurich on Wednesday (25 August), pharmaceutical giant Novartis finally closed a deal to take over a 77% stake in eyecare company Alcon held by Nestle. Novartis's quest had started two and a half years ago, and the event marked a big win for the company.

Since setting its sight on Alcon in 2008, about $40bn (£26bn) in cash has changed hands between Novartis and Nestle. Another $11bn (£7bn) is currently on the table in Novartis's merger bid for a remaining 23% stake held by Alcon's minority shareholders. If Novartis succeeds at acquiring those remaining shares, as is expected, it is likely to become the largest merger in Swiss history.

And it will mark another milestone, too, becoming one of the biggest buyouts in history, ahead of the $32.6bn (£21bn) deal for Canadian telecom company BCE.

The outcome may be uncertain, but so far Novartis's Swiss and US lawyers have manoeuvered smartly to maximise their clients position. The person directing those manoeuvers, who is responsible for the structure of the Nestle share purchase, is Eric Shube of Allen & Overy (A&O).

In early 2008, Novartis general counsel Thomas Werner, who had practiced at A&O, turned to Shube and asked him to devise a legal strategy for the acquisition of Alcon, the world's largest maker of contact lenses and other eyecare products. Novartis, Switzerland's largest drug company, was looking to diversify its product base. Nestle, another Swiss company, wanted to raise cash, but not all at once. Executives from each of the companies wanted to make a deal.

In the first phase, Nestle agreed to sell Novartis a 24.99% stake in an all-cash deal – the percent was just under the threshold for deals that trigger extensive EU antitrust review. That purchase, first announced in April 2008, made it through regulatory review easily.

The second phase in this process was a longer one. For tax and accounting reasons, Nestle wanted to wait until early 2010 to complete the sale of the rest of its stake. Still, Novartis and Nestle wanted to lock down an agreement, so the two sides signed on to a highly unusual options structure – from 1 January 2010, Novartis had the right to exercise call rights (the right to buy Nestle's remaining Alcon stock) at an agreed-upon price, while Nestle could force a deal via its put rights (the right to sell its stock) at another price. On 4 January, Novartis exercised its rights.

"There are very, very experienced deal lawyers who have never seen a structure like this," says one lawyer involved. "Most M&A lawyers look at deal precedents to structure a transaction. Shube had to go from scratch."

"I can't think of any deals I've worked on that have been structured like this," Shube says. In many instances, options agreements are written by the lawyers, but never executed by the companies.

Because of the change of control involved, the second share purchase faced six months of antitrust review, with filings in the US, Europe, Australia, and Canada. On Wednesday, it officially passed muster.

Still, the deal is not done. Alcon's remaining shareholders are standing in the way of Novartis's plans to take over Alcon completely, threatening litigation over an offer they say is unfairly low. In January, Novartis announced plans to acquire the rest of the company via a merger, offering a valuation that was substantially lower than the cash share price Nestle had received.

A tender offer would have been likely to have cost Novartis much more and would have implicated greater US and Swiss regulatory scrutiny. By making its move via a merger, Novartis would have to abide by the much simpler Swiss Merger Act, requiring that two-thirds of the shareholders approve a merger, along with a simple board majority. The second share acquisition left Novartis with over three-quarters of the shares; on 16 August, Novartis's slate of board members was installed, giving the company that requisite majority.

The deal "was structured to maintain as much control for Novartis of the outcome as possible," says one deal lawyer.

Because the company is incorporated in Switzerland, minority shareholders are not shielded from being squeezed out of the deal as they would be under Delaware law. Also, the company's listing on the New York Stock Exchange affords its aggrieved minority investors very little recourse.

In July, Alcon's independent directors announced that they had put together a $50m (£32m) litigation war chest, indicating that they are ready to fight. The end-game is likely to be fought out in Swiss boardrooms or before a Swiss judge. So far, neither side has asked a judge for a declaratory judgment yet.

This article first appeared on The Am Law Daily blog on americanlawyer.com.