According to the CEO of Novartis, Joe Jimenez, Novartis may exit from the board of Roche without the premium, as long as the situation is allowed. By now, Novartis holds 33% of the total shares of Roche, values about 13.7 billion Swiss francs (13.81 billion American dollar).
Rumor comes for a long time
There is saying about Novartis intended to sale its share of Roche for a long time. Novartis purchased one third of Roche’s share that has voting right in 2003, and the previous CEO Daniel Vasella proposed the merge of they two companies, while Roche rejected at that time.
Even though the company insists that hold the share of Roche is a long-term financial investment, the rumors about Novartis were about to sale its shares of Roche hardly stop. Especially, in 2014, the new CEO of Novartis Joerg Reinhardt met the chairman of Roche Franz Humer, induced the guess of the company merge. However, Reinhardt states that it is impossible of the merge considered that the headquarters are in the same place and have a lot of commons, they two companies are “friends”, and as long as the cooperation went well, Novartis will prefer to hold the share than sale it.
Finally decided to sale?
However, the situation changed when is goes to 2016. First of all, at the end of April, the local newspaper reported that Novartis was contacting with investment bank, intended to sale the shares at the premium through the non-open market. And just in a month, the company announced to sale its stock right of Roche in the open market without the premium.
The reasons why this situation happened could be concluded as following: since 2014, Roche abandoned two projects bitopertin and onartuzumab that were both under the research, and even the sales were increased 5%, its profit was actually decreased 5%. The price of shares started to drop. At the same time, the income of Novartis itself also decreased 3%, and the cooperative sales projects Lucentis and Eylea were declined 11%. Since this year, the price of Novartis has dropped 16%. And it seems that Novartis sold the share of Roche at a premium did not goes well, consider that 33% is not a small proportion and Roche rejected the buy-back.
What the money will be used for?
Moreover, Novartis announced a reorganization strategy to separate its pharmacy business into two parts: cancer medicine, and other medicine. It could be seen that Novartis is preparing to reorganize the newly acquired anticancer drug assets of GlaxoSmithKline. And considered that Novartis has invest a lot on the CAR-T therapy, and started the cooperation with the University of Pennsylvania, the CTL019 drug based on the CAR-T therapy has been approved by FDA, and there is news saying that Novartis is on the list of the bid of the anticancer drug company Mediation. Therefore, the capital that Novartis gathered from the share sales would be used for acquiring anticancer drugs assets.
