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| Novartis chairman Joerg Reinhardt |
Novartis ($NVS) Chairman Joerg Reinhardt may be chatting with his colleagues at Roche ($RHHBY). His company may want to work more closely with its hometown rival. But joining forces in a merger? No, thank you.
As Reuters reports, Reinhardt told the Swiss newspaper SonntagsZeitung over the weekend that he met with outgoing Roche Chairman Franz Humer a few weeks ago. Reinhardt has also exchanged email messages with Christoph Franz, who will take Humer's place after Roche's annual meeting tomorrow.
"Two pharma groups working in the same location have many topics in common," Reinhardt told the Zeitung.
One thing they have in common is Roche shares. Under former Chairman and CEO Daniel Vasella, Novartis accumulated a one-third stake in Roche's voting stock. The inevitable follow-up question now, as then, is whether Novartis would use that beachhead to fight for a merger.
It's a question that has come in for increased discussion recently, since Reinhardt took over as chairman in August and Humer said he would step down--and as Novartis eyes its smaller business units for big changes. On the flip side, Novartis CEO Joe Jimenez has fielded regular questions about whether the company might sell that 33% stake in Roche.
Reinhardt put forward his own answers to both questions. Do Novartis and Roche each want to stay independent? "Absolutely," he told the Zeitung.
Will Novartis sell its Roche stake? Not if Roche keeps performing. "The shares are in good hands with us," Reinhardt said. "For as long as Roche does well, we take pleasure in them."
Novartis has its eye on other potential sales, including its vaccines and animal health businesses, as part of a companywide strategic review. The company reportedly was negotiating a swap with Merck & Co., in which it would trade both of those units for Merck's consumer health business--a deal that would help fix both companies' scale problems in those areas. But Merck is taking bids for its consumer health business, and Novartis is said to be entertaining potential vaccines buyers.
The Novartis review will be wrapped up by year's end, Reinhardt told the Swiss newspaper. "Then we will know if and how we have to change our structure and organization," he said.
- read the Reuters story
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