Novartis to launch U.S.2.4 billion share buy-back

Novartis have announced that its Board of Directors has decided to launch a new share repurchase program for up to CHF 3 billion following the completion of a program initiated in 2002. The new program was approved by shareholders at the Annual General Meeting (AGM) in February 2004.

Novartis intends to repurchase the shares over an unspecified time via a second trading line on virt-x. The program will apply exclusively to Novartis registered shares listed on the SWX Swiss Exchange and not to Novartis American Depositary Shares (ADSs) traded on the New York Stock Exchange.

In addition, the Board of Directors intends to propose at the next AGM in 2005 that the share capital of Novartis be reduced by an amount corresponding to the shares repurchased so far under this new program.

"Launching a new share buy-back program enables Novartis to continue returning surplus liquidity to shareholders, which is a result of our dynamic organic growth and robust free cash flow," said Daniel Vasella, Chairman and CEO of Novartis. "At the same time, we are maintaining a high degree of strategic flexibility and financial strength to seize appropriate opportunities."

Two earlier share buy-back programs were initiated in 1999 and 2001, both of which ended after the purchase of CHF 4 billion in shares in each program. Novartis completed its third share buy-back program on 6 August 2004 and bought back 69 779 000 shares for an amount of CHF 4 billion. A proposal will be put forward to shareholders at the Annual General Meeting in 2005 to cancel 22 839 000 shares, or 0.82% of the current share capital, after 46 940 000 shares were cancelled at the Annual General Meetings in 2003 and 2004.

The existing second trading line for Novartis registered shares will be maintained on virt-x for this new program. Novartis will be the exclusive buyer on this line and intends to repurchase its own shares for the purpose of subsequently reducing its share capital. Ordinary trading of Novartis registered shares under the Swiss security number 1 200 526 will not be affected and will continue as usual. A shareholder wishing to sell Novartis registered shares has the option of selling either via the ordinary trading channel or to Novartis via the second trading line for the purpose of the subsequent share capital reduction. Novartis has, however, at no point in time any obligation to purchase its own shares on the second trading line.

Shares purchased on the second trading line are subject to the Swiss federal withholding tax rate of 35% on the difference between the repurchase price of the Novartis registered share and its nominal value.


The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of News Medical.
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