Novartis AG NVS said the planned spin-off of its Sandoz unit is expected to occur on October 4, ending an era for the Swiss pharmaceutical giant in which generic and prescription drugs businesses coexisted.
In October 2021, Novartis commenced a strategic review exploring all options. In August last year, the company laid out its plans to spin off Sandoz into a new publicly traded standalone company.
Novartis said the separation will occur through a proposed distribution of Sandoz shares to its existing shareholders. Novartis shareholders will get one Sandoz share for every five Novartis shares held and one Sandoz ADR for every five Novartis ADRs.
Novartis shareholders will vote on the proposed Sandoz spin-off and complete separation at an extraordinary general meeting on September 15.
Sandoz generated pro forma 2022 net sales of $9.12 billion and made a net profit of $677 million last year, according to its listing prospectus.
After the spin-off, Sandoz will remain dependent on Novartis for technical development and manufacturing for a significant time, according to its listing prospectus.
Sandoz forecasts a core EBITDA margin of 18%-19% in 2023, expected to rise to 24%-26% by 2028.
The companies will enter into development-collaboration and manufacturing-and-supply agreements, under which Novartis will support the development of certain Sandoz biosimilar assets for five years initially and provide commercial manufacture, supply of certain biosimilar products for the first ten years after the spin-off, Sandoz said in the prospectus.
Citing analyst estimates, Financial Times noted that Sandoz's potential market capitalization could be approximately $18-$25 billion, slightly smaller than the eyecare business Alcon, which Novartis spun off in 2019 and listed at a valuation of $28 billion.
Price Action: NVS shares are down 0.96% at $100.75 during the premarket session on the last check Friday.
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