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InvestmentsRoche chairman sees greater flexibility after Novartis deal

Roche chairman sees greater flexibility after Novartis deal


¬© Reuters. Chairman Christoph Franz of Swiss healthcare firm Roche addresses a media briefing as a part of the corporate’s One hundred and twenty fifth-anniversary celebrations in Basel, Switzerland, September 28, 2021. REUTERS/Arnd Wiegmann

ZURICH (Reuters) – Roche’s $20.7 billion transfer to purchase again almost a 3rd of its voting inventory from fellow Swiss drugmaker Novartis will give it extra strategic flexibility, Chairman Christoph Franz stated in an interview revealed on Saturday.

The deal, introduced on Thursday, extricates Roche from possession ties to a significant competitor with strategic vetoing energy, although it has stored a passive position within the face of highly effective Roche household shareholders.

Roche can afford the deal with out slicing again on analysis and growth spending, and acquisitions, Franz advised Swiss newspaper Finanz und Wirtschaft.

Bridge financing can be used initially to pay Novartis, after which Roche would refinance the debt by way of longer-term devices akin to bonds, he stated.

“Our net debt is almost zero. It is very important that we can raise the substantial debt without compromising operational and strategic flexibility with regard to our core business,” Franz stated.

“We can continue our focus on research and development, we can continue in-licensing and acquisitions as we have done in the past years. We are not losing any freedom as a result of this transaction. Quite the opposite.”

Franz stated he noticed the brand new scenario, with the repurchased shares being eradicated, as serving to Roche proceed with no need to get the approval of Novartis.

“A key reason for us is that decisions requiring a two-thirds majority at the Annual General Meeting can only be made with the approval of a major shareholder such as Novartis,” he stated.

“Although there was no specific cause for concern, this new situation is now clearer.”

Still, this did not imply that Roche would embark on a shopping for spree of huge acquisitions, Franz added.

“We believe that smaller bolt-on acquisitions are the right thing for us to do to strengthen innovation within the company,” Franz stated.

“Also, in the medium and longer term, the transaction with Novartis would indeed give us more freedom to issue equity. But our policy of being very cautious with major acquisitions is not changing.”

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