Novartis plans to sell its stake in Roche for about $20.7 billion, the Basel, Switzerland-based drugmaker said Nov. 4.
Novartis holds 53.3 million bearer shares in Roche, which represents about 33 percent of Roche's voting rights, but only around 6 percent of all shares, according to The Wall Street Journal.
"After more than 20 years as a shareholder of Roche, we concluded that now is the right time to monetize our investment," Novartis CEO Vas Narasimhan, MD, said in a news release. "Today's announcement is consistent with our strategic focus and we intend to deploy the proceeds from the transaction in line with our capital allocation priorities to maximize shareholder value and continue to reimagine medicine."
Novartis has been a shareholder of Roche since May 2001. It acquired its stake for about $5 billion, and said it will gain about $14 billion from the sale of its shares.
Novartis said it doesn't consider its investment in Roche as part of its core business and "therefore not a strategic asset."
Christoph Franz, PhD, chair of Roche, said the transaction is in the best interest of the company, the Journal reported. The sale of Novartis' shares will add around 7 percent to its earnings per share, analysts at Jefferies told the Journal.
Read Novartis' full news release here.