The Wall Street Journal (1/31, Whalen, Cimilluca, Winslow) reported, "Roche Holding AG made a lower, hostile bid for Genentech Inc. after failing to reach an agreement with its directors, risking a messy battle to acquire full control of biotechnology's crown jewel and its valuable drugs and scientists." The Switzerland-based company "said it will cut its offer to $86.50 a share, reducing the deal's value to about $40 billion from $44 billion."
According to the New York Times (1/31, B3, Pollack), executives with the Swiss drug company "apparently became frustrated with what they saw as the slow, halting pace of negotiations." The company "is also gambling that the depressed stock markets and capital crisis will make Genentech shareholders settle for a lower price. Some analysts said the lower bid was meant as a reminder to Genentech shareholders that absent Roche's bid, Genentech shares would no doubt be selling for less than they are now." The company "might also be trying to get the deal done, or at least buy as many shares as possible, before the results are released in mid-April of an important clinical trial testing Avastin [bevacizumab] as a treatment for early-stage colon cancer. ... If the trial has positive results, Genentech's share price could jump to over $90, maybe $100, which might put an acquisition out of reach for Roche."
"Genentech Inc...told its shareholders to ignore [Roche's] $86.50-a-share," Bloomberg News (1/31, Doherty, Zimm) reported. Genentech "urged shareholders to 'take no action,' and said it will respond to Roche within 10 days."
Charles Sanders, the chairman of the special committee formed by Genentech to negotiate a deal, said that the offer "substantially undervalues the company," AFP (1/31) added. Sanders "said Roche was seeking to take advantage of weak share prices."
"Shareholders of Genentech responded by selling off the stock; shares fell 3.4 percent, or $2.86, to $81.23," Forbes (1/31, Espinoza, LaMotta) noted. "The stock traded above the new offer price earlier this month, but it hasn't gone above the earlier offer price since September."
The San Francisco Business Times (1/30, Leuty), Barron's (1/30, O'Brien) Stocks To Watch Today blog, Bloomberg News (1/31, Doherty) in a separate story, and the Wall Street Journal Health Blog in two separate blogs, the Wall Street Journal (1/30, Goldstein) and Wall Street Journal (1/30, Goldstein), also covered the story.
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