Novartis willing to sell Roche stake without demanding premium - CEO (updated)

Roche Holding AG

25/05/2016 10:32

(Releads with CEO comments on Roche stake) 
    ZURICH, May 25 (Reuters) - Swiss drugmaker Novartis  NOVN.S  
is ready to sell its near $14 billion stake in rival Roche 
 ROG.S  without demanding a premium, Chief Executive Joe Jimenez 
said on Wednesday. 
     Novartis has been discussing options with banks for selling 
its Roche shares worth about 13.70 billion Swiss francs ($13.81 
billion), potentially providing cash for new deals, sources 
familiar with the situation told Reuters last month. urn:newsml:reuters.com:*:nL5N17S1LO 
    It built up its one-third stake in Roche voting stock  
between 2001 and 2003 under former Chairman Daniel Vasella for a 
possible merger that never happened. 
    In the past, Jiminez has said he would want a premium price 
for the Roche stake, reflecting the difficulty of recreating 
such a large position in the open market. But on Wednesday, he 
said that is no longer a dealbreaker.  
    "We would now think through that, and would potentially make 
a decision to exit without a premium, if the opportunity were 
right," Jimenez told investors at an event in Basel.  
    Pushing ahead with a sale now could make sense for Jimenez, 
who has been under pressure to improve growth after difficulties 
with the company's eyecare unit Alcon and new heart drug 
Entresto.  urn:newsml:reuters.com:*:nL5N18G400 
    But after winning a favourable industry recommendation for 
Entresto last week, it said on Wednesday it remains confident 
annual sales will peak at around $5 billion, despite 
first-quarter sales of $17 million.  urn:newsml:reuters.com:*:nL5N18I03C 
    It stuck to its 2016 forecast for Entresto of $200 million 
in revenue.  urn:newsml:reuters.com:*:nFWN18K0HM 
    Last week it split its main drugs division into two units, 
one for cancer, the other focusing on the rest of Novartis' drug 
portfolio. Seven top executives have left this year, including 
drugs chief David Epstein last week.  urn:newsml:reuters.com:*:nL5N18K50R 
    The company is also fighting a lawsuit by U.S. prosecutors 
who allege its sale force ran a decade-long doctor kickback 
scheme involving sham events that led to overcharging the 
federal government. Novartis has disputed the allegations. (http://reut.rs/1VHLpYz) 
  urn:newsml:reuters.com:*:nL5N17O4CF 
    Jimenez said Novartis had moved away from its aggressive 
"results-oriented" sales approach. 
    "We had to shift the culture of the company in terms of a 
compliance standpoint," he told investors, adding he is 
eliminating "high-risk" speaker programmes for older products 
that had the potential to blur the line between education and 
inappropriate drug promotion. 
    Chief Financial Officer Harry Kirsch said the company's 
priorities for cash were organic growth, boosting dividends, 
"bolt-on" acquisitions and share buybacks.  urn:newsml:reuters.com:*:nZ8N17L014 
    Novartis stock rose 1 percent to 78.65 francs by 0850 GMT, 
trimming their decline this year to 9 percent. Roche's illiquid  
voting stock rose 1.2 percent and its non-voting stock was up 1 
percent, in line with a 1.1 percent gain in the European sector 
index  .SXDP . 
($1 = 0.9920 Swiss francs) 
 
 (Reporting by John Miller and Joshua Franklin; Editing by 
Michael Shields and Susan Thomas) 
 ((joshua.franklin@thomsonreuters.com; +41583067007; Reuters 
Messaging: joshua.franklin.thomsonreuters.com@reuters.net)) 
 
Keywords: NOVARTIS HEART DRUG/