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Novartis ADRs (NYSE: NVS) rose 3.8 percent in premarket trading on Thursday after the firm announced it will buy back up to $15 billion in shares.
The money for the repurchase will come from the $20.7 billion the Swiss pharmaceutical company received through the sale of a portion of its stock in rival Roche (SIX: ROG).
Novartis said the buyback will begin in the next days and be completed by the end of 2023. Novartis held 33% of Roche’s voting shares, or 53.3 million, and leveraged record-high stock prices to exit the firm it bought between 2001 and 2003.Under then- Novartis Chief Executive Officer Daniel Vasella, the shares were acquired as part of a takeover effort.
The project failed, although Novartis made a $14 billion profit on the initial investment. Roche will cancel the Novartis shares it buys back.
Novartis claims that the buyback program will leave them with enough cash to sustain a rising dividend, as well as business investments and bolt-on acquisitions. It reaffirmed its expectation of revenue growth of 4% or more through 2026.
Story by : Norvisi Mawunyegah