Novartis buys 20% of Roche voting shares as merger rumors increase

Novartis of Switzerland has surprised industry observers by announcingthat it has bought a 20% voting stake in local rival Roche. Shares in both companies were boosted after it was revealed that the former is obtaining 32 million bearer shares from the Swiss entrepreneur Martin Ebner's BZ Gruppe Holding for 4.83 billion Swiss francs ($2.79 billion) in cash, which represents a premium of around 5%.

Daniel Vasella, Novartis' chief executive, said the deal represents "a long-term financial investment, which is also strategic in nature," adding that his group was "the most logical buyer of the Roche share package offered by the BZ Gruppe." Dr Vasella noted that, at present, no collaboration has been discussed with Roche's management, "although we hope that over time we will be able to explore areas of collaboration as Roche has good long-term business prospects."

Acknowledging the sale, Roche noted that the stake purchased by Novartis represents around 3.7% of its issued securities, ie bearer shares and non-voting equity securities combined, adding that the current majority holding remains unaffected. Furthermore, the company said that it will continue "its established strategic and operational direction" by growing organically and will "additionally consider in-licensing opportunities, strategic alliances and acquisitions."