BB Biotech initiates an extensive program to reduce the discount
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BB BIOTECH AG /
BB Biotech initiates an extensive program to reduce the discount
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Board of Directors adopts accretive strategy
The persistently high discount between the Net Asset Value and the share price
of BB Biotech AG, currently 21%, has prompted the Board of Directors to take
concerted action to remedy the situation with the objective of bringing the
discount towards the targeted range of 10% to 15% within the next 12 to 18
months. A steady reduction of the discount will be achieved by firmly reducing
the number of shares through a series of share buyback programs. Safeguards will
be taken to ensure the success of this accretive strategy. In other action
concerning its investment strategy, BB Biotech has further tightened and
optimized its stock selection process. This is expected to have a positive
impact on the future selection of highly innovative companies.
Main factors for the share price discount
Historical data reveals a clearly negative correlation between the discount and
capital market developments. The discount increased during periods of market
correction and declined when markets subsequently recovered. However, since the
outbreak of the credit and financial market crisis in the autumn of 2008, the
discount between NAV and the share price has remained at a high level of 26%
(average discount during the preceding 12 months) and has not receded to any
significant extent despite the upward trend on stock markets. This unfavorable
development of the discount can be attributed to the following factors:
* General demand for equities has been sharply lower in the wake of the credit
crisis and BB Biotech AG has not been spared either.
* The biotech sector was hurt by uncertainty stemming from healthcare reform
in the USA and fiscal austerity measures in Europe. Both curbed investor
appetite for healthcare stocks, especially in Europe.
* European biotech companies have, with few exceptions, fallen short of their
targets since 2008. This has undermined sentiment toward the sector and
toward BB Biotech AG because the shareholder groups it targets are in
Europe.
* Several of BB Biotech's core investments underperformed in recent years.
Large-cap biotech stocks have clearly lagged behind companies in the small
and mid-cap segments.
Both the level of the discount in absolute terms and its wide range of
fluctuation are dissatisfying for the company's shareholders and they have
discouraged primarily institutional investors from acquiring large positions in
BB Biotech AG.
Steadfast accretion strategy to reduce and stabilize the discount
In order to better serve the interests of current shareholders and to make the
company more attractive to potential investors, the Board of Directors has
formulated and will now implement an accretive strategy through a series of
share buyback programs. The objective of the initial phase of strategy
implementation (accretion), which will be marked by heightened share buyback
activity over a period of 12 to 18 months, will be to bring the discount down
from the previous average level of 26% into the targeted range of 10% to 15%.
During the subsequent consolidation phase, share buyback programs will be used
on a selective basis if necessary. The interests of long-term shareholders will
be the overriding priority throughout the implementation of this strategy. A
high correlation between Net Asset Value and the share price will thus be
established in the foreseeable future.
The Board of Directors has provided the necessary resources and taken safeguard
measures to ensure the successful implementation of this strategy and the
attainment of the stated objectives:
a) Multiple share buyback programs per year to be conducted
To remedy the supply overhang, BB Biotech will seek shareholder approval to
conduct additional share buyback programs, making selective use of the maximum
permissible repurchase limits. These buyback programs will be conducted
resolutely yet also prudently, giving the Board of Directors and executive
management maximum flexibility to buy large blocks of shares through the second
line of trading. Shareholders will already vote on a new share buyback program
at the General Meeting on March 21, 2011. Previous share buyback programs were
conducted over a long period of time but the current proposal would allow BB
Biotech AG to be more active and, if necessary, exercise the full market powers
granted to it under this program.
b) Enhanced stock and financial management expertise
The Board of Directors' healthcare expertise and competence in stock-market and
financial management matters are being strengthened. With the nomination of Dr.
Erich Hunziker for election to the Board of Directors, BB Biotech has succeeded
in attracting a highly experienced financial market expert to its board. His
vast specialist expertise and professional experience gained while serving as
Chief Financial Officer and Deputy Head of the Corporate Executive Committee of
the Roche Group represent a tangible enhancement of directorial skills and
competence. Thanks to his professional and specialist competencies, Erich
Hunziker will provide valuable inputs for the company's investment strategy and
actively support the implementation of the accretive strategy. He will be
standing for election to the Board of Directors at the General Meeting of
shareholders on March 21, 2011. BB Biotech AG will do everything in its power to
ensure successful implementation of the initiated accretive strategy. This will
also include the selective engagement of external specialists to facilitate the
implementation and precise the coordination of the accretive strategy.
c) Dividend payments to be discontinued
Up to now the company's dividend policy was designed to compensate shareholders
for the discount. The previous dividend policy was also intended to make the
stock more attractive to a broader section of the investment community. However,
as historical data on the discount show, this policy has been unable to entirely
fulfill the given objectives. The Board of Directors of BB Biotech believes the
company's capital can be more effectively deployed through the accretive
strategy. Therefore, a dividend will not be paid out for future years. The
dividend of CHF 3.20 for the 2010 financial year which will be proposed at the
General Meeting on March 21, 2011 will not be affected by this decision.
Review and continual adjustment of investment strategy
The Board of Directors and executive management of BB Biotech have no doubt that
demand for innovative and modern drugs will remain strong. Medical treatments
must not only meet stringent requirements with regard to effectiveness and
safety, for example, they are increasingly being subject to cost-benefit
analyses. Ongoing pressure on drug prices as a means of saving costs in the
healthcare sector has created another hurdle that drug makers must overcome. The
aforementioned factors can be used to define the subset of companies that will
belong to the winning players also in today's new operating environment. In
response to this situation, the investment criteria applied by BB Biotech will
be even more selective going forward, and this is expected to have a positive
effect on the focused investment strategy pursued by BB Biotech. Besides its
selected investments in highly innovative companies, BB Biotech will invest in
firms that can maintain high rates of growth as well as high margins in the
current industry environment. Certain regions such as India offer considerable
catch-up potential with regard to healthcare. These structural growth markets
will receive greater attention in BB Biotech's investment strategy.
For further information:
Bellevue Asset Management AG, Seestrasse 16, 8700 Küsnacht, Switzerland
Thomas Egger, Tel. +41 44 267 67 09,teg(at)bellevue.ch
www.bbbiotech.com
Company profile
BB Biotech invests in companies in the fast growing market of biotechnology and
is one of the world's largest investors in this sector with CHF 1.2 bn in assets
under management. BB Biotech is listed in Switzerland, Germany and Italy. Its
investments are focused on listed companies that are developing and
commercializing novel medical treatments and cures. BB Biotech's investment
selection process is guided by the fundamental research and analysis of
physicians and molecular biologists. Its Board of Directors has many years of
experience in industry and science.
--- End of Message ---
BB BIOTECH AG
Vordergasse 3 Schaffhausen Switzerland
WKN: AONFN3;ISIN: CH0038389992;
Media Release BB Biotech_21.03.11 (PDF):
http://hugin.info/130285/R/1498158/433786.pdf
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Source: BB BIOTECH AG via Thomson Reuters ONE
[HUG#1498158]
Datum: 21.03.2011 - 07:25 Uhr
Sprache: Deutsch
News-ID 52588
Anzahl Zeichen: 10435
contact information:
Town:
Schaffhausen
Kategorie:
Business News
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