Rivals Novartis and Roche ‘disentangle’ in $20.7bn share sale

Novartis AG, a shareholder in Roche for more than 20 years, said on Thursday the two Swiss drugmakers had agreed that Roche would buy Novartis’s nearly one-third voting stake in its crosstown rival for $20.7 billion (€17.88 bn).

Novartis has agreed to sell 53.3 million Roche bearer shares for a price of $388.99 per share (356.93 Swiss francs per share) which reflects the volume-weighted average price of the Roche non-voting equity certificates over the last 20 trading days until November 2nd, Novartis said in a statement.

“After more than 20 years as a shareholder of Roche, we concluded that now is the right time to monetise our investment,” Novartis chief executive Vas Narasimhan said in the statement.

“Today’s announcement is consistent with our strategic focus and we intend to deploy the proceeds from the transaction in line with our capital allocation priorities to maximise shareholder value and continue to reimagine medicine,” he said.

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Novartis said it will report a gain from the sale of the stake of about $14 billion.

The transaction is subject to approval by the shareholders of Roche at an extraordinary general meeting on November 26th.

Roche said in a separate statement the debt-financed repurchase was conditional upon the approval of a capital reduction by cancellation of the repurchased shares and the approval of the interim financial statements prepared for the purpose of the transaction.

Roche said the “disentanglement” of the two competitors would give it “full strategic flexibility”. It confirmed its outlook for 2021 and said it wanted to increase its dividend for 2021.

– Reuters