Ciba, Sandoz Merger May Be Delayed Till '97
The two firms announced a plan to merge in March to form the second most powerful company in the industry and received European Commission clearance of the deal in July. They had originally expected to complete the merger in late summer or early fall this year.
Daniel Vasella, chief executive officer designate for the merged company, said in an interview: If I wanted to be very precise, I would say that I am hoping for a January launch of Novartis and when I say hoping it implies that, I don't think it completely unrealistic but I also don't think it's a sure bet.
He said the US Federal Trade Commission (FTC) review of the group's genetic technology operations in the US was taking longer than expected. The fact is that we thought that by late fall...and fall is until December 21, we could get approval. I think it's not impossible but I think the caveat we have to have is this whole area surrounding genetic technology, he said. It's a completely new field of activity...It's all research and it's a complex techological area so it takes more time than anticipated to even know if there is any issue or not, he said.
But the two companies were on target with their integration programme and did not anticipate restructuring cost overruns.
He said: It went faster than planned and we're really now all waiting on the FTC approval in order to start implementing.
The combined company, Novartis, would be second only to Britain's Glaxo Wellcome in pharmaceuticals with a 4.4 per cent global market share.
It will have a market capitalisation of some SFr75 billion and annual sales after spinoffs and divestitures of about SFr26 billion.
Called the world's biggest corporate merger, the deal dwarfs previous mega-mergers like Walt Disney's acquisition in 1995 of the CapitalCities/ABC television network in the United States.
Vasella said management was in talks with a number of parties interested in segments of the two groups' other US businesses but did not specify which of the many US activities of Sandoz or Ciba he was referring to.
The companies said when announcing first half results last month that they were discussing with potential buyers divestment options in their U.S. crop protection and animal health businesses. The combined company would be a clear global leader in crop protection.
There are two areas we are looking at, the first is in agribusiness in crop protection where we are in the process of divesting the corn herbicide business, and the animal flea and tick control business in North America, Vasella said.
We are in discussions with several interested parties...it's a business which is highly attractive and therefore we have several potential buyers..., he added.
He said a sale of the operations in question would not affect the overall strategic position of Novartis in the crop protection area.