Novartis to sell its Roche stake for $20.7 billion

Novartis agreed to sell its nearly one-third stake in fellow Swiss drugmaker Roche back to the company for around $20.7 billion.

Why it matters: This is the final chapter of a story that began in 2001, when Novartis launched an unsuccessful effort to buy its crosstown rival. It will help Novartis further streamline its business — selling generics unit Sandoz could be next — while Roche gets to rid itself of a competitor having veto rights.

Details: Novartis will sell 53.3 million shares at $388.99 each, a price based on a 20-day weighted average.

The bottom line: "Novartis acquired its stake in Roche between 2001 and 2003 for around $5 billion, and said it has reaped recurring earnings contributions and cumulative dividends in excess of $6 billion. The company expects to report a gain of $14 billion from the stake sale." — Jack Denton, Barron's