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Novartis’s spinoff of its eyecare division Alcon, set for Tuesday April 9, marks the largest Swiss stock deal in a decade and forces a reshuffle of the benchmark Swiss Market Index (SMI) as private bank Julius Baer gets booted out.
FILE PHOTO: The logo of Swiss pharmaceutical company Novartis is seen at the company’s plant in Hueninge, France, Jan. 27, 2016. REUTERS/Arnd Wiegmann/File Photo 03 Apr 2019 05:45PM Share this content
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ZURICH: Novartis’s spinoff of its eyecare division Alcon, set for Tuesday April 9, marks the largest Swiss stock deal in a decade and forces a reshuffle of the benchmark Swiss Market Index (SMI) as private bank Julius Baer gets booted out.
Novartis has estimated Alcon’s value at around 25 billion Swiss francs (US$25 billion), while some analysts predict an initial market capitalization of 21 billion francs (US$21 billion) to 23 billion, implying shares worth from 43 to 47 francs.
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By contrast Baer’s value has tumbled by a third in a year to 9.3 billion francs. It will instead be included in the SMIM index, replacing Aryzta, SIX Swiss Exchange said after Tuesday’s market close.
Dominated by Nestle, Novartis and Roche, the SMI is Switzerland’s most important index. Membership is based on market capitalization, adjusted for the free float of readily tradable shares in its constituents.
Alcon is being spun off in a one-for-five share deal announced by Novartis last June as it focuses on new drugs rather than the surgical devices and contact lenses Alcon makes.
Joining the SMI may boost demand from funds focusing on the top Swiss companies. Yet Alcon’s inclusion means healthcare and medical technology will weigh even more heavily on the SMI.
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Novartis’s weighting had been capped 18 percent,
