Novartis, Merck & Co. weigh $5-billion asset swap: report

According to people close to the situation, Novartis is in discussions with Merck & Co. about exchanging its vaccine and animal-health units with the latter's over-the-counter (OTC) business, Bloomberg reported. One person noted that the companies may each trade about $5 billion in assets under the deal.

The sources indicated that an agreement hasn't been finalised, and Novartis may choose another option. In November 2013, Novartis CEO Joseph Jimenez said that the company might consider divesting its non-strategic animal health and OTC units if it cannot turn them into businesses of global scale. Last month, people familiar with the matter suggested that the drugmaker would prefer to trade its animal-health unit because it doesn’t need cash and would rather invest in an area in which it is already a leader.

Cowen & Co. analyst Steve Scala previously noted that "the numbers make sense" for such a transaction between the two companies. Novartis spokeswoman Julie Masow said the company doesn’t comment on rumour or speculation, while Merck spokesman Steven Cragle declined to comment. Cragle previously said that the drugmaker continues to evaluate all of its businesses, including its consumer and animal-health units, and would consider alternatives if it were to view them as being more productive outside of Merck.

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