Psst. Want some juicy details? Roche filed its tender offer for Genentech with the SEC, and in the documents disclosed some behind-the-scenes dickering over its first-and-higher bid for the company. The most surprising: Genentech met Roche's original $89-per-share offer with a demand for $112 instead.
That demand was based on a financial model put together by Genentech and its financial advisor Goldman Sachs. In the SEC filing, Roche said that the assumptions underlying that model were fantastically optimistic, much more so than the projections Genentech had handed over a few months before. Though Roche took issue with almost everything Genentech figured, one of the big sticking points was Avastin sales; Genentech and Goldman were predicting big increases, based in part on some forthcoming colon cancer research, but Roche said it's not convinced that research will be as positive as its counterparts believe.
Plus, Roche maintains, the falling markets and strained economy have changed Genentech's future prospects, depressing its market value. And that's why it lowered its $89 bid to $86.50, rather than boosting it closer to that $112 asking price.
Meanwhile, Genentech's board told shareholders not to act on the offer, but to wait until its special committee has an opportunity to weigh in. Also, Roche said it's going to exercise its right to have more seats on Genentech's board. Right now, the company has three of the seven; its longtime agreement with Genentech allows Roche to boost the size of the board and fill the vacancies with its own folks--and now it will.
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