VASELLA PHOTO BY ANDY METTLER

Novartis has bought 20% of Roche's voting shares from Swiss gadfly investor Martin Ebner for approximately $2.8 billion. The purchase makes Novartis the second-largest holder of Roche shares, after the 50.1% block held by the Hoffmann and Oeri-Hoffmann families. Ebner, who had been trying to win a seat on the Roche board in a bid to restructure the company, finally lost patience and sold out.

Securities analysts say Novartis Chairman and Chief Executive Officer Daniel Vasella is determined not to enter a hostile-bid situation for Roche. Instead, Vasella says, he is open to discussions with Roche executives and the family and would like to pursue collaborative projects. The buy is, he says, "a long-term financial investment, which is also strategic in nature. We believe that we were the most logical buyer of the Roche share package offered by Ebner."

Vasella's strategy seems to be a gentle hemming in of Roche and its options. Roche now will find it difficult to make any major acquisition or merger deals without the support of Novartis, which, effectively, could block any such move.

Novartis, itself the product of the 1996 merger of Sandoz and Ciba-Geigy, has been performing well as an investment holding and is thought to have a much stronger pipeline than Roche.

Together, the two companies would have combined pharmaceutical sales of approximately $20 billion per year. Novartis' pharmaceuticals sales in 2000 were $11.58 billion, and those of Roche were $10.47 billion. The two combined would join the superleague of pharmaceuticals giants now occupied by Pfizer and GlaxoSmithKline, with sales of $20 billion or more per year.

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