Genentech, Roche near deal
Swiss-based Roche offers to buy drug partner Genentech at USD 95 per share.NEW YORK - Genentech's board of directors is close to reaching a USD 95 (CHF 110) per share sale to cancer drug partner Roche, according to a report by the Wall Street Journal.
Neither South San Francisco, California-based Genentech nor Basel, Switzerland-based Roche would comment on the report, which cites unnamed sources familiar with the matter. The report follows Friday's increased hostile tender offer from the Swiss drugmaker.
Alexander Klauser, Roche spokesman, said, "What I can reiterate is we announced last Friday a very attractive tender offer for USD 93 per share. It is now up to the shareholders to decide on the offer until 20 March."
On Friday, Roche increased its bid to USD 93 per share, or USD 45.7 billion, after its USD 86.50-per-share offer failed to receive shareholder support. The companies negotiated since July, when Genentech rejected a USD 89-per-share bid as too low.
Genentech urged shareholders to refrain from taking action on the latest bid, though it did not yet make a formal recommendation. The current hostile tender offer is set to expire 20 March, and Roche needs to buy the majority of the 44 percent of Genentech it doesn't own in order to acquire the biotechnology company.
The report comes the same day as drugmaker Merck says it will pay USD 41.1 billion for rival Schering-Plough in the latest of a series of large acquisitions as drugmakers try to prepare for revenue losses as drug patents expire.
BMO Capital Markets analyst Jason Zhang said shareholder turnout on the standing offer would determine whether Roche's offer is high enough.
"If this is true, then they (Genentech) just basically concluded that there is no way they can demand a higher price," he said, commenting on the report of a potential USD 95-per-share deal.
Genentech in previous Securities and Exchange Commission filings said it believed it could earn as much as USD 112 per share. Analysts maintained that Genentech is worth more than Roche's initial offers, and the company spent its analyst meeting earlier in March reaffirming its case. But the company lost some influence because of the slow economy and fears over a prolonged recession, Zhang said.
"If this had been a different economic environment, Genentech would have had the leverage," he said.
The goal of any buyout is obtaining the cancer drug Avastin. It is approved to treat various types of breast, lung and colon cancers and is Genentech's best-selling product. If the latest study on early-stage colon cancer is successful, the share price will likely rise, several analysts said, but the opposite could also hold true.
AP / Expatica