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Novartis sells its Roche stake to Roche for $20.7 billion -Breaking

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© Reuters. FILE PHOTO – The logo of Novartis, a Swiss pharmaceutical company is visible at its plant in Stein (Switzerland), October 23, 2017. REUTERS/Arnd Wiegmann

ZURICH (Reuters – Novartis AG has been a shareholder of Roche for over 20 years. On Thursday, the two Swiss drugmakers announced that Roche had purchased Novartis’s almost one-third vote stake in Roche cross-town rival, for $20.7 billion.

Novartis will sell Roche bearer share at $388.99 each (356.93 Swiss Francs/share). The price is based on the volume-weighted median price for Roche non-voting equity certificate over the 20 trading days ending Nov. 2. Novartis announced in a statement.

In a statement, Vas Narasimhan, Chief Executive of Novartis said that after more than twenty years as shareholders in Roche, it was now the best time to monetize the 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 maximize shareholder value and continue to reimagine medicine,” he said.

Novartis reported a $14 billion profit from the sale.

This transaction requires approval from the shareholders at Roche’s extraordinary general meeting, Nov. 26, to be approved.

Roche stated in separate statements that the debt-financed purchase of shares was contingent upon approval of capital reductions by cancelling the repurchased share and approval of interim financial statements.

Roche claimed that “disentanglement”, which would result in the disintegration of two rivals, would provide it with “full strategic flexibilty”. Roche confirmed its outlook for 2021, and stated that it would increase its dividend in 2021.

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