Deal: Novartis Sells $21B Roche Stake To Roche
Novartis (SWX: NOVN), a Swiss drugmaker, has clinched one of the biggest biotech deals of this year with a domestic rival, Roche (SWX: RO). It’s not a typical deal you see every time, such that Novartis has agreed to sell its stake in Roche back to Roche.
- Roche has said it’ll repurchase all of its shares held by Novartis. The drugmaker will pay 19bn Swiss Francs ($21bn) for 53.3 million shares held by Novartis, using debt to finance the deal.
- The deal ends a monetary alliance between both companies tracing back to two decades ago when Novartis began amassing its Roche stake for a total of $5bn. So far, the investment has yielded dividends of over $6bn for Novartis and is finally selling for $21bn, implying hefty profits.
- The transaction solidifies control for the pool of shareholders from Roche’s founding families over the company. Once it’s completed, their voting rights over Roche will increase to 67.5%. The deal will also increase the percentage of Roche shares that are publicly-traded from currently 16.6% to 24.9%.
- Notably, Roche said its founding families weren’t directly involved in the deliberations of the deal, even though it very much favors them. The drugmaker pitched it as a good strategic decision favoring its business henceforth.
- With its Novartis relationship dissolved, Roche will be “even better positioned strategically in the future to provide life-saving medicines and diagnostics to people around the world.“ its board Chairman Christoph Franz said.