Novartis will sell 53.3 million bearer shares of Roche’s common stock, bringing an end to its investment in Roche for 20 years


Novartis agreed to sell its Roche stake. (Credit: F. Hoffmann-La Roche Ltd.)

Swiss drugmaker Novartis has agreed to sell its 33% stake in Roche back to the company in a bilateral transaction valued at $20.7bn.

The transaction includes the sale of 53.3 million bearer shares of Roche’s common stock and brings an end to Novartis’ investment in Roche for 20 years.

It represents a price of $388.99 per share, indicating an average price of the Roche non-voting equity certificates over the last 20 trading days, ended 2 November 2021.

The closing of the transaction is subject to the approval by the shareholders of Roche, at the Extraordinary General Meeting (EGM) planned to be organised on 26 November 2021.

Roche said that the board of directors has approved the proposed transaction and will finance the repurchase using debt.

Roche board of directors chairman Christoph Franz said: “I am convinced that the envisaged transaction is in the best interest of Roche and the holders of Roche equity securities from a strategic and economic perspective.

“As a result, Roche will be even better positioned strategically in the future to provide life-saving medicines and diagnostics to people around the world.”

Between 2001 and 2003, Novartis has purchased the stake in Roche as a long-term financial investment for around $5bn.

The investment is said to have delivered significant, recurring earnings contribution and cumulative dividends worth more than $6bn.

Novartis said that the financial investment in Roche is no longer a part of its core business and does not consider it as a strategic asset.

Furthermore, the company will report a gain of around $14bn from the sale, in its ‘income from associated companies’ section, which will be core adjusted.

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

“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.”

In September this year, Novartis acquired Arctos Medical, a gene therapy start-up developing optogenetic therapies for the treatment of blindness.