The growth of Novo Nordisk's ($NVO) information technology group from an internal team to a standalone business makes it a prime target to join the pharma spinoff trend. And having spent the first few months of 2014 considering its options, Novo Nordisk is edging forward with its plans.
After posting full-year results that reaffirmed the belief that the unit--NNIT--can thrive on its own, company executives have appointed Morgan Stanley and Danske Bank to advise on a possible deal, Reuters reports. Operating profit was up more than 10% year-on-year, a growth rate NNIT expects to come close to matching in 2014. The growth is being driven by overseas expansion and diversification beyond providing services to Novo Nordisk, which NNIT expects to generate 50% of sales in 2014.
With NNIT starting to resemble an independent IT services business--and spinoffs en vogue in pharma--Novo Nordisk thinks now is the right time to consider parting ways with the unit. NNIT was formed, under a different name, from Novo Nordisk's IT team in 1994 and has steadily grown, globalized and diversified over the past 20 years. The IT services business now has 2,100 employees, one-third of whom are based outside of Novo Nordisk's home territory, Denmark.
In a statement, NNIT CFO Krogsgaard Thomsen said it is too early to say whether Novo Nordisk will spin off the unit, but there was nothing in the results to derail the plans. Thomsen will now work with the bankers and others to decide whether NNIT is more valuable as a fully independent business or as a limited liability company wholly owned by Novo Nordisk.
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