You've probably heard that Roche today offered $89 per share for the 44 percent of Genentech that it doesn't already own, or $43.7 billion. It's a premium of about 8.8 percent over Friday's close and 19 percent over one month ago. Immediately, some analysts deemed the offer inadequate. Investors seemed to think so, too; Genentech's Frankfurt shares quickly soared past $89, and in the U.S., shares climbed to $95.25 before the market opened.
So, are we set for another long-playing game of buyout poker? You'll recall that Roche spent months offering $75 a share for the diagnostics company Ventana, steadfastly proclaiming the whole time that it wouldn't up the price. But Ventana management held out, and so did its shareholders. Finally, in January, the two companies made a deal for $89.50 a share.
Wall Street seems to think a counteroffer is in order: One raised his Genentech price target to $105, saying that Roche could up its bid to $120 per share. Another said the offer undervalues Genentech's pipeline--and it's true that an 8.8 percent premium isn't much compared to Big Pharma's other bids for biotech firms. But in a letter to its independent directors, Roche called its offer "fair and generous," and in a press release pledged that combining the two companies would almost immediately benefit shareholders. We'll see how Genentech responds--and what Roche does after that.