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Novartis takes Roche stake
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May 7, 2001: 5:36 a.m. ET
Swiss health care group makes 'strategic investment' in rival
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LONDON (CNN) - Swiss health care group Novartis has taken a stake in its home town rival, Roche Holding, paying 4.83 billion Swiss francs ($2.79 billion).
Novartis said the purchase, which represents 3.7 percent of the total issued shares but 20 percent of those with voting rights, was "a long-term financial investment which is also strategic in nature."
Daniel Vasella, chairman and chief executive of Novartis said: " At present, no collaboration has been discussed with Roche management, although we hope that over time we will be able to explore areas of collaboration."
Roche's chairman Franz Humer denied it was a prelude to a merger. The company said the current majority holding was unaffected, with the Hoffman and Oeri-Hoffman families holding 50.1 percent of the bearer shares.
"Roche will continue its established strategic and operational direction. Roche wants to grow organically and will, as before, additionally consider in-licensing opportunities, strategic alliances and acquisitions," the company said in a statement.
Novartis bought its bearer shares from BZ Gruppe Holding, run by Swiss financier Martin Ebner. It paid 151 francs apiece for 32 million shares, a premium of five percent on Friday's closing price of 143.7 francs.
BZ had been looking to sell its stake after repeatedly expressing its dissatisfaction with the way Roche was being managed. Ebner had said it lacked strategic focus.
Both Novartis and Roche are based in Basel. Novartis's core businesses are in pharmaceuticals, consumer health, generics, eye-care, and animal health.
Its chief financial officer Raymond Breu told Reuters that one reason his company had bought a stake was to prevent competitors from doing so.
Roche has suffered sales disappointments and development problems in its flagship pharmaceuticals division. But Breu described the company as a quality research outfit with good potential. 
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