Novartis cuts uncomfortable ties with Roche with sale of $ 20.7 billion stake

Por Silke Koltrowitz y Ludwig Burger

ZURICH, Nov 4 (Reuters) – Novartis AG said on Thursday it would sell its voting stake in Roche to its rival for $ 20.7 billion, a deal that unlinked two pharmaceutical companies that were entwined by investment for two decades.

The deal frees Roche from ownership ties with a major competitor that has strategic veto power, but has played a passive role vis-à-vis the powerful shareholders of the Roche family.

The announcement sent Roche shares reaching an all-time high. By mid-session, they were up 2.4%, while Novartis shares were up 0.2%.

Novartis has agreed to sell 53.3 million Roche bearer shares at $ 388.99 (356.93 Swiss francs) per share, a price that reflects the volume-weighted average of Roche’s non-voting share certificates during the 20 trading days until Nov. 2, Novartis said in a statement.

In another statement, Roche said that it will use debt to finance what it called a “delisting of two competitors” and that it plans to reduce its capital by canceling the repurchased shares to regain full strategic flexibility.

A Roche spokesperson told Reuters that the company’s balance sheet remained strong after the transaction. “We can continue with our M&A strategy as before, there are no limitations in that regard.”

Novartis’s involvement began in 2001, when Swiss activist investor Martin Ebner, known for orchestrating the merger that led to banking giant UBS, offered his stake in Roche to his rival out of frustration at rejected proposals.

Ebner had then built up his stake in Roche to drive strategic change, but ran into opposition from the founding families that control the group. Roche shareholders will vote on the plan at an extraordinary general meeting on November 26.

(Reporting by Silke Koltrowitz, Ludwig Burger and Paul Arnold; Edited in Spanish by Gabriela Donoso)

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