Novartis Shares Decline As Spin Off Sandoz's Market Debut Falls Short of Expected Valuation

Sandoz Group AG SDZNY SDZXF enters a new era as a standalone player in generic and biosimilar medicines.

Novartis AG's NVS spin-off was listed and commenced trading today on the SIX Swiss Exchange.

Novartis also reiterated its focused approach to capital allocation, including the ongoing $15 billion share buy-back announced in July 2023 and to continue paying an annual dividend, up from the CHF 3.20 per share paid in 2023, without re-basing after the Sandoz Spin-off.

Sandoz shares dipped on their market debut after the company was valued at a lower-than-expected CHF 10.3 billion ($11.2 billion).

Citing some analysts, Reuters noted that Deutsche Bank estimated likely valuation at $11-13 billion, while Berenberg had forecast $17-26 billion.

Jefferies had seen a likely equity value of $12.3-16.2 billion.

Sandoz shares, which opened at 24 francs each, became members of the Swiss Performance Index and the Swiss Leader Index, among other stock market gauges, and American depositary receipts also started trading on Wednesday.

The stock was down 23.18 francs at 0844 GMT, for a total equity value of CHF10 billion.

CEO Narasimhan told CNBC that the company had accelerated its efforts over the last six years to "focus Novartis as a pure play innovative medicines company."

"Now we spin [off] Sandoz, and what is left now is really where I think Novartis is best suited to succeed in the long run — a pure-play innovative medicines company focused on bringing R&D efforts and the new medicines we create to markets around the world," he added.

Price Action: NVS shares are down 3.30% at $96.18 on the last check Wednesday.