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Sandoz Sets Date For Spinoff

Further Details Unveiled As Novartis Issues EGM Invitation For 15 September

Executive Summary

Novartis says its spinoff of Sandoz is set to occur “on or around 4 October” following recent board approval for the move. The company has now published a formal invitation to an EGM on 15 September, along with a shareholder information brochure and listing prospectus.

Novartis has announced that the long-awaited spinoff of Sandoz as a standalone generics and biosimilars business is expected to take place “on or around 4 October,” as the parent company shared further details and resources ahead of an extraordinary general meeting in September.

Issuing an invitation to the EGM on 15 September – as previously indicated by the company (Also see "Novartis Sets Out Next Steps For Sandoz Spinoff" - Generics Bulletin, 18 Jul, 2023.) – Novartis also published a shareholder information brochure offering an overview of the spinoff and its rationale, as well as an indicative timeline of the next steps.

Meanwhile, Sandoz has published a detailed 335-page prospectus ahead of its listing on the SIX Swiss Exchange, alongside an American Depositary Receipts program in the US. A further supplement with Sandoz combined and pro forma financial statements for the first half of 2023 is planned to be published in early September.

At the EGM on 15 September, Novartis shareholders will vote on “a special distribution by Novartis of a dividend-in-kind to effect the spinoff of Sandoz” as well as “a reduction of the share capital of Novartis in connection with the spinoff of Sandoz.”

The Novartis board has already unanimously endorsed the spinoff and recommended that shareholders approve the separation of Sandoz.

Describing the EGM as a “key step in the separation process, which was initiated in August 2022” (see sidebar), Novartis said it was “confident that the spinoff is in the best interests of shareholders, creating a European champion and a global leader in generics and biosimilars, and a more focused Novartis.” Looking ahead, “both companies would be able to focus on maximizing value creation for their shareholders by prioritizing capital and resource allocation, employing separate capital structure policies, and increasing management focus on their respective business needs,” the parent company underlined.

If Novartis shareholders approve the proposed special distribution at the EGM, the spinoff “will be implemented through the distribution of a dividend-in-kind of Sandoz shares to Novartis shareholders, and of Sandoz ADRs to Novartis ADR holders.” Novartis shareholders and Novartis ADR holders will receive one Sandoz share for every five Novartis shares, and one Sandoz ADR for every five Novartis ADRs.

According to the indicative timeline published by Novartis, following the EGM on 15 September the last day of trading of Novartis shares including the right to receive Sandoz shares will be 3 October. After close of business on 3 October, Sandoz shares will be listed on the SIX Swiss Exchange on 4 October at 9am CET, with Sandoz shares credited to Novartis shareholders shortly afterwards. Then the distribution of net cash proceeds for fractions of Sandoz shares will occur within around two weeks after 4 October.

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