Novartis to sell its Roche stake in a bilateral transaction to Roche

Nov 04, 2021

Ad hoc announcement pursuant to Art. 53 LR

• Novartis and Roche agree a bilateral transaction for the sale of Roche bearer shares held by Novartis for a total consideration of USD 20.7 billion

• Price of USD 388.99 per share (CHF 356.93 per share) reflects the volume-weighted average price of the Roche non-voting equity certificates (Genussschein) over the last 20 trading days ending on November 2, 2021

• Monetization consistent with Novartis strategy as a focused medicines company

• Use of proceeds will be in line with capital allocation priorities to enhance strong returns to shareholders

Basel, November 4, 2021 — Novartis has agreed to sell 53.3 million (approximately 33%) Roche bearer shares in a bilateral transaction to Roche for a total consideration of USD 20.7 billion.

Vas Narasimhan, CEO of Novartis, said: “After more than 20 years as a shareholder of Roche, we concluded that now is the right time to monetize our 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.”

Novartis has been a shareholder of Roche since May, 2001 and currently holds 53.3 million bearer shares of Roche’s common stock, representing approximately 33% of aggregate outstanding bearer shares. Novartis acquired the stake between 2001 and 2003 for a total consideration of approximately USD 5 billion as a long-term financial investment which delivered significant, recurring earnings contribution and cumulative dividends in excess of USD 6 billion. Over the holding period of the stake, this resulted in an annualized return of 10.2 % in USD (and 6.6% in CHF). Today, Novartis does not consider the financial investment in Roche as part of its core business and therefore not a strategic asset.

Novartis will report a gain from the sale of the stake in income from associated companies of approximately USD 14 billion, which will be core adjusted.

The transaction is subject to the approval by the shareholders of Roche, at the Extraordinary General Meeting (“EGM”) of Shareholders of Roche to be held on November 26, 2021.