Ciba-Geigy → Sandoz
The merger that created Novartis: Basel neighbours Ciba-Geigy and Sandoz combined as equals in 1996, with a joint market value of $62.5bn, to form the world's second-largest drugmaker — at the time described as the largest corporate merger on record.
A merger of equals that created Novartis, then the largest pharmaceutical merger ever attempted.
- Value
- $30B
- Announced
- March 1996
- Completed
- December 1996
- Sector
- Pharma
- Deal type
- merger
- Acquirer
- Ciba-Geigy (Switzerland)
- Target
- Sandoz (Switzerland)
Why it mattered
By the mid-1990s governments were squeezing health budgets and drugmakers were consolidating: Glaxo had bought Wellcome, Pharmacia had merged with Upjohn and Hoechst had agreed to buy Marion Merrell Dow. Ciba-Geigy was the world's ninth-largest drug company and Sandoz the 14th; together they held 4.4% of the market, second only to Glaxo Wellcome. Analysts noted that Ciba's pipeline had suffered setbacks, including the withdrawal of its stroke drug Selfotel.
The deal, announced in March 1996, took the industry by surprise. It was framed as a merger of equals, with Sandoz shareholders receiving 55% of Novartis — one share for each Sandoz share, against 1.06 for each Ciba share. Ciba's chairman, Alex Krauer, became chairman; Daniel Vasella, head of Sandoz's drugs division, became president. The name came from the Latin novae artes, "new skills". On 1995 figures the two had sales of $30bn and about 135,000 employees, and they planned to cut 10% of the workforce, roughly 13,000 jobs, within three years, with SFr1.8bn of synergies over the same period.
Novartis was to concentrate on pharmaceuticals and agrochemicals. Ciba would spin off its speciality chemicals and the construction chemicals would be sold; Sandoz had already separated its chemicals business, as Clariant, in 1995. Competition authorities in Europe and the United States were expected to scrutinise the deal closely; the new company began operating on 20 December 1996.
What it left behind
Novartis kept narrowing. Ciba Specialty Chemicals was spun off in 1997 and later bought by BASF; Sandoz's North American corn herbicides went to BASF and its construction chemicals to SKW Trostberg. In 2000 the agribusiness was merged with AstraZeneca's to form Syngenta. Gerber was sold to Nestlé in 2007, and Alcon, assembled for about $60bn, was spun off in 2019. The Sandoz name, revived in 2003 for the generics division, became a separate listed company again on 4 October 2023. What remains is a medicines company, the eighth-largest by revenue in 2024. A merger of equals can be the start of a long simplification rather than the end state: of the conglomerate the two parents built, Novartis ended up keeping essentially the prescription drugs.