Novartis To Sell its Stake in Roche for $20.7 Bn

Novartis has agreed to sell its stake in Roche in a bilateral transaction to Roche, for a total consideration of $20.7 billion.

Novartis has been a shareholder of Roche since May 2001 and currently holds 53.3 million bearer shares of Roche’s common stock, representing approximately 33% of aggregate outstanding bearer shares. Novartis acquired its stake in Roche between 2001 and 2003 for a total consideration of approximately $5 billion as a long-term financial investment, which delivered recurring earnings contribution and cumulative dividends in excess of $6 billion. Novartis says it now does not consider the financial investment in Roche as part of its core business and therefore not a strategic asset.

 “After more than 20 years as a shareholder of Roche, we concluded that now is the right time to monetize our investment,” said Vas Narasimhan, CEO of Novartis, in a November 4, 2021 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 maximize shareholder value and continue to reimagine medicine.”

The repurchase by Roche is 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 by an Extraordinary General Meeting of Roche. The Extraordinary General Meeting will take place on November 26, 2021.

The transaction does not result in a change of company control of Roche as the pool formed by shareholders of the founding families has held the majority of the votes represented at general meetings of Roche previously. The voting power of the family pool will increase to approximately 67.5% upon completion of the transaction without any involvement or participation of the family pool in the transaction. The percentage of shares held by the public will increase from currently 16.6% to 24.9% with the cancellation of the equity stake held by Novartis.

Source: Novartis and Roche