The IPO is planned for the second half of 2023, Novartis announced on Thursday.
Sandoz includes Novartis’ biosimilars and over-the-counter medicines businesses. Novartis announced in October 2021 that it would review all options for Sandoz. The group had given itself a deadline of the end of 2022 for this.
This review has now shown that a spin-off from Sandoz through a 100% spin-off is in the best interests of shareholders, according to the Novartis report. This will create the largest European generics company and a leading global supplier of biosimilars. Novartis, in turn, will become a more focused company as a result.
Novartis shares slightly higher in early trading after spin-off plans
Novartis shares started the day with price gains on Thursday. However, the spin-off of Sandoz as an independent listed company that was announced today has met with little enthusiasm among experts.
At 1:05 p.m., Novartis gained 0.52 percent on the SIX to CHF 81.23.
Novartis put the division to the test some time ago, so the announcement as such is not necessarily very surprising. However, analysts still tend to rate today’s news rather negatively.
A first comment at ZKB states that the following conclusion was reached some time ago: a spin-off of the division does not bring any added value, since the Sandoz market valuation is probably below the fair value valuation according to the DCF. A negative price reaction is therefore to be expected.
The US broker Jefferies is also cautious. The pharmaceutical analyst there would have clearly preferred a sale of Sandoz. It cannot be ruled out that the planned spin-off at the parent company will even lead to a dilution of profits, he said.
The timing of the planned spin-off is also a topic of discussion in expert circles, as this is not to be completed until the second half of 2023. Once again the shareholders of Novartis are condemned to wait, so the tenor.
Vontobel, on the other hand, is somewhat positive. The separation of the generics business from the innovative medicines division makes sense, since the management of both divisions has become more complex in recent years. Focused leadership will help advance the independent growth strategies of the two divisions. The spin-off will also allow Novartis to advance its focus strategy.
Novartis shares have been struggling somewhat in recent weeks. “Stepping into place” was the order of the day for long stretches. Observers do not see the hoped-for course driver for the securities of the Basel parent company in the available news about the strategic future of Sandoz.
Basel (awp)