Novartis Seen Mulling Roche Share Sale

26.04.2016 -

Novartis is said to be planning to divest its nearly $14 billion stake in rival Swiss drugmaker Roche, accounting for about 6% of that company’s shares and more than 30% of its voting capital, according to the Swiss newspaper Sonntagszeitung, citing supervisory board and banking sources. Both companies are based in Basel. The sale would free up cash at Novartis for possible acquisitions, the paper’s sources said, while stressing that a deal may not be imminent.

Under its former CEO Daniel Vasella, Novartis took a stake in Roche in the early 2000s with the eye to a merger that never got off the ground. More recently, speculation has been building about a potential sale of the stock.

Selling and reinvesting now would relieve pressure on CEO Executive Joe Jimenez, to improve growth after disappointments with the company's eyecare unit Alcon and new heart drug Entresto, analysts said. The majority of Roche’s voting capital is still held by members of the Swiss Hoffmann-Oeri family.

Some commentators have noted that Roche also needs to think about spending some of its already ample cash on acquisitions, especially as it faces growing competition from manufacturers of biosimilars, among them Novartis’ own Sandoz subsidiary.