The announcement sent Roche shares hit an all-time high. By mid-session, they were up 2.4%, while Novartis shares were up 0.2%.
Novartis has agreed to sell 53.3 million Roche bearer shares at $ 388.99 (356.93 Swiss francs) per share, a price that reflects the volume-weighted average of Roche’s non-voting share certificates during the 20 trading days until Nov. 2, Novartis said in a statement.
In another statement, Roche said that it will use debt to finance what it called a “delisting of two competitors” and that it plans to reduce its capital by canceling the repurchased shares to regain full strategic flexibility.
A Roche spokesperson told Reuters that the company’s balance sheet remained strong after the transaction. “We can continue with our M&A strategy as before, there are no limitations in that regard.”
Novartis’s involvement began in 2001, when Swiss activist investor Martin Ebner, known for orchestrating the merger that led to banking giant UBS, offered his stake in Roche to his rival out of frustration at rejected proposals.
Ebner had then built up his stake in Roche to drive strategic change, but ran into opposition from the founding families that control the group. Roche shareholders will vote on the plan at an extraordinary general meeting on November 26.
By Silke Koltrowitz and Ludwig Burger, from Reuters agency