Benzinga | Nov 4, 2021 07:34AM EDT

Novartis To Offload Its Stake Back To Roche For $20.7B

* Novartis AG (NYSE:NVS), a shareholder in Roche Holdings AG (OTC:RHHBY) for more than 20 years, would sell its entire stake, which is nearly one-third voting stake in Roche for $20.7 billion.

* The deal means that Novartis will give up its influence over strategic decisions taken by Roche.

* Novartis has agreed to sell 53.3 million Roche bearer shares for $388.99 (CHF 356.93) per share, a price that reflects the volume-weighted average of the Roche non-voting equity certificates over the 20 trading days to November 2.

* In a separate statement, Roche said it would use debt to finance the deal and plans to reduce its capital by canceling the repurchased shares to regain "full strategic flexibility."

* Roche shareholders will vote on the plan at an extraordinary general meeting on November 26.

* Novartis CEO Vas Narasimhan said now was the right 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," said Vas Narasimhan.

* Novartis said the investment acquired for around $5 billion in 2001 and 2003 had delivered recurring earnings contributions and cumulative dividends of over $6 billion.

* The transaction will not change control as the founding families' shareholder pool already held the majority of the votes, it said. Its voting power will increase to around 67.5% following the deal.

* Price Action: NVS shares are up 0.17% at $83.73, while RHHBY stock is up 0.76% at $50.45 during the premarket session on the last check Thursday.