The Wall Street Journal (2/10, B2, Winslow, Whalen) reports, "A special committee of Genentech Inc.'s board wanted Roche Holding AG to pay $112 a share to acquire the remainder of the biotechnology company -- $23 a share more than the Swiss drug giant offered to pay when it announced its bid last July."
"The details, the first public indication of the behind-the-scenes discussions between the companies, are contained in documents related to the tender offer by Roche on Monday," the New York Times (2/10, B9, Pollack) explains. The Swiss drugmaker "is seeking to buy the 44 percent of Genentech it does not own for $86.50 a share in cash, or about $42 billion. Unable to reach a deal with the Genentech board after first proposing an $89-a-share takeover last July, Roche late last month said it would go directly to Genentech's stockholders through a tender offer." In addition, Roche "said in the filings on Monday that after buying tendered shares, it planned to exercise its right to increase its representation on Genentech's board to be proportional to its stake in the company, which would give it a majority on the board." Currently, it "holds three of seven seats."
According to the Roche filing, "Genentech said the $112 price reflected future growth prospects for the company's best-selling product, the cancer drug Avastin [bevacizumab], and its other experimental drugs in development," Bloomberg News (2/10, Chase, Olmos) adds. However, "Roche "disagreed with a number of assumptions" in Genentech's financial model, including 'key assumptions' about future products, according to the filing. Genentech's medicines generate about 40 percent of the Swiss drugmaker's revenue." Furthermore, "a major point of contention was the probability of success of Genentech's Avastin in current clinical trials for early stage colon, breast and lung cancers." The treatment "is seen as the main engine of Genentech's future growth, though Roche estimated the trials would take longer, had lower odds of success, and the cancer drug's new markets would be smaller than Genentech projected."
"Genentech's board committee urged shareholders to take no action with respect to the tender offer at this time," the AP (2/10) adds. The board's special "committee said it will take a formal position regarding the Roche offer within 10 business days and explain its position in an upcoming regulatory filing." The Los Angeles Times (2/10), the San Francisco Chronicle (2/9, Tansey), TheStreet.com (2/10, Feuerstein), and the Silicon Valley/San Jose Business Journal (2/10) also cover the story.
Copyright © 2008 by Custom Briefings | 11190 Sunrise Valley Drive, Suite 130 | Reston, VA 20191