Maybe Roche was unwilling to cede the deal spotlight to Merck and Schering-Plough. Whatever the motivation, news has leaked to the Wall Street Journal that the Swiss drugmaker is close to its long-held goal of making a deal for Genentech. The two companies negotiated over the weekend, arrived at a price--$95 per share--and lack agreement only on a couple of fine-print provisions. In fact, the $46.7 billion deal was so close, an announcement was all but imminent, the Journal reported.
The pesky details? Timing and closing conditions. Those things should be sorted out soon, with an announcement coming sometime this week, the sources told WSJ, but as always in deal negotiations, the whole thing could still fall apart.
As you know, the back-and-forth in this bid-and-ask situation has been going on for months. First, Roche offered $89; Genentech asked for $112. Then, early this year, Roche revised its bid downward to $86.50, citing market conditions. Genentech, meanwhile, took its case for a much higher price to shareholders.
That was last Monday. Friday, Roche gave in and boosted the offer to $93--and apparently, that concession was enough to oil the dealmaking gears. A little more grease in the form of a $2 increase, and Genentech's board is closer to a handshake than it ever has been. DNA shares leapt to $92.63 on the news yesterday.
If the board signs on, all Roche will have to do is persuade 90 percent of the other shareholders to go along. Analysts told the Journal that the $95 offer "probably" would deliver. But it could be close, Larry Feinberg of Oracle Partners, a big Genentech shareholder, told the Journal. " The large shareholders have spoken and they want $95-plus."