Novartis Preparing to sell its Roche stake


The Swiss pharma giant Novartis is planning to sell its $14 billion stake in Roche. The company has already hired banks to help in the selling process as Novartis plans to sell the stake on a so called order book process in which banks collect purchase offers within predefined price range from selected investors on a weekly basis.

Novartis had built up its one third stake in Roche’s voting stock about a decade ago between 2001 to 2003 as a basis for a merger possibility which actually never took place. The chairman and the CEO of the company that time was Daniel Vasella.

Soon after Vasella’s departure in 2013, speculations have been built up that Novartis may sell 6% of its Roche’s stake. The current sale is expected to prove fruitful for the company which is struggling with growth after apparent disappointments with Alcon (the company’s eye care unit) and Entresto (a breakthrough Heart Failure medicine).

“Novartis is in a time of need, having had setbacks with both Alcon and Entresto, and investor sentiment is languishing,” said Bernstein analyst Tim Anderson, who sees acquisitions in the biotech or ophthalmology fields as “distinctly possible”.

Analysts have suggested that one option could be that Roche buys the stake as a part of a share repurchase programme but Roche has shown no interest in such an idea as it has always considered repurchase the lowest priority. “Sooner or later the stake will be sold and Novartis is talking to banks about how it could be done. But nothing is imminent,” reported a source.

Joseph Jimenez, current CEO Novartis, had discussed the idea of selling Roche stake at a premium price in an interview three years ago but the demand of premium price seems to be shed off as the selling is taking place on a order book basis.

Featured image credit: Stock Market Chart, Graph On Black Background © volkovslava (Stock Photo ID: 119116022)

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