Roche agreed to buy 67.5%, nearly one-third voting stake, in its cross town rival, Novartis AG for $20.7 billion, according to a press release by Novartis on Thursday.
The deal is likely to boost the shares of Roche higher. They were expected to open 2.5% up and Novartis shares higher in pre-market trading.
Novartis entered into an agreement to sell 53.3 million Roche shares for $388.99(356.93 Swiss francs) per share, a price that signals the volume-weighted average of Roche non-voting equity certificates within 20 trading days to Nov.2.
Roche shareholders will vote on the proposal at an extraordinary general meeting scheduled on November 26.
Novartis stated it will report gain from the sale of the equity stake for nearly $14 billion. The investment acquired for nearly $5 billion in 2001 and 2003 had posted recurring earnings contributions and dividends of over $6 billion.
Roche stated that holders of Roche equity securities would benefit from the earnings accruing from the transaction as it seeks to increase its 2021 dividend.
