Can Roche buy Genentech in a crazy market?

What's a pharma dealmaker to do? The market has been gyrating for weeks now, and stocks plummeted yesterday, with the Dow posting its largest-ever single-day point loss. All of which makes your garden-variety tender offer a sketchy proposition. When shareholders don't know from one day to the next what their stock might do, deciding to accept or reject a buyout bid can be tough.

Witness Roche's bid for Genentech. At $89 a share, the offer didn't satisfy Genentech management. Investors agreed, bidding the stock up as high as $98.81, according to the Wall Street Journal Health Blog. Clearly, the market thought Roche would boost its offer. But now, DNA is trading below $89; it closed Monday at $85.30, regaining some ground to around $87 at press time.

It wasn't just market turmoil that sent Genentech stock tumbling. A Deutsche Bank analyst report said the "uncertainty over the timing of the Genentech bid as well as the deal or break price has only increased with recent market events." With credit markets seized up, Roche could have a bit of difficulty financing the acquisition, but the drugmaker has a strong balance sheet, the analyst said, which should help. In any event, Roche says it's still committed to the buyout--market roller-coaster notwithstanding.

- read the Health Blog item