* Novartis holds one third of Roche voting stock
* Novartis CEO Jimenez says stake is worth a premium
By Ben Hirschler
DAVOS, Switzerland, Jan 25 Novartis
Chief Executive Joe Jimenez played down talk that it was looking
to sell its one-third voting stake in crosstown rival Roche
, and certainly not at its current market price.
There has been widespread speculation that the Novartis
could be heading for a change of strategic direction - including
a possible sale of the Roche stake - following the appointment
of a new chairman on Wednesday.
"It's a strategic purchase," Jimenez said of the holding
during an interview at the World Economic Forum in Davos.
"What we mean by that is the value of that stake is worth
more than the market price today. Today, you couldn't recreate a
30 percent stake in a company like Roche by purchasing on the
"From a shareholder standpoint, we wouldn't want to
sub-optimise the asset, just like we wouldn't want to
sub-optimise any other asset."
Previous Novartis boss Daniel Vasella secured the 33 percent
voting stake in Roche between 2001 and 2003. Vasella initially
said he wanted to merge the two Swiss drugmakers but, after
hitting resistance, kept the block as a long-term investment.
Vasella struck at a low point for Roche, whose stock has
since risen sharply, driven by its leading position in cancer
The rise in Roche's valuation has put the group out of reach
of Novartis as a takeover target but the holding has proved to
have been a rewarding investment, with the voting bearer shares
held by Novartis currently worth some $12 billion.
Investors have suggested several times that Novartis might
cash in its investment, although Vasella's presence as chairman
was seen as a potential obstacle. Vasella's replacement by Joerg
Reinhardt, who worked for nearly three decade at Novartis before
moving to Bayer in 2010, has now rekindled the idea.
Analysts believe one way to unwind the holding would be for
Roche to pay a significant premium for the Novartis stake as
part of a share repurchase programme, though there are no
indications that this is on the agenda.
Investors have also pondered whether Novartis should sell
its vaccines business or some other units to make the company
more focused. Jimenez, however, said all the company's
operations had good growth potential.
"We believe that with our commitment to R&D we can drive
growth in all of our divisions, so at this time we are not
anticipating a change in the structure of the company, but at
the same time we are constantly evaluating," he said.
(Editing by Will Waterman)