6 April 2018 No. 3899 Scripscrip.pharmaintelligence.informa.com Pharma intelligence | informa Eric Le Berrigaud, an analyst at Bryan Gar- nier, said in an investor note March 27 that $13bn “is a touch above our estimated trans- action price.” He added that the sale will provide Novartis “with more financial flexibil- ity to be used exceptional share buy-backs or access to more strategic alternatives i.e. broadening the range of targets for potential bolt-on acquisitions fitting its core business- es.” It is “strategically good for Novartis given that it simplifies and focuses its organization.” Analysts at Deutsche Bank noted that the deal would be dilutive to the tune of around 3.5% per year to core earnings per share un- less Novartis deploys the cash elsewhere. They wrote that “disappointingly, the company is vague in this regard, discussing only its stan- dard capital allocation policy, rather than any Shutterstock: Nomad_Soul Shutterstock: pre-prepared statement for a commitment to reduce the dilution through a share buy back. As such, Novartis management has the abil- What Will Novartis Do With $13bn ity to create shareholder value through this transaction but the jury remains out for now.” The jury appears to be in at Société Gé- Cash Pile From GSK? néral, where analysts issued a note say- KEVIN GROGAN
[email protected] ing that the $13bn price tag “is a positive surprise” as they had valued the stake at ovartis AG CEO Vas Narasimhan capital to grow our core businesses, drive $10.6bn. They wrote that they expect Nara- has only been in the hot seat for a shareholder returns and execute value-cre- simhan “to refocus the company on innova- Ncouple of months but is wasting no ating bolt-on acquisitions.” Narasimhan also tion,” believing that Novartis will give more time in transforming the firm into a pure stressed his often-repeated message about details about its plans to redeploy the cash pharma player, selling its stake in a con- building “the leading medicines company, with its first quarter results on April 19.