Fed up with waiting to take over Genentech, Roche not only went hostile with its bid for the California company--it lowered its offering price, too. Early today, Roche cut its bid to $42 billion--or $86.50 a share--from $89 a share, or almost $44 billion. (The actual difference between the two offers is about $1.6 billion.)
As you know, Roche has been dickering with a special committee of Genentech's board since July, when its initial offer was rejected as too low. The negotiations have been fruitless, said Roche Chairman Franz Humer (photo), so the company is now making its offer directly to shareholders. "We feel it is now time to give the Genentech minority shareholders the opportunity to decide on our offer," Humer said. "Especially in the current market environment the offer provides an opportunity for all public shareholders to achieve liquidity and to receive a fair price for all their shares."
Genentech stock closed at about $84 yesterday, so Roche's new offer isn't much of a premium. But Roche believes that its outstanding bid has been propping up the company's share price and considers its new bid completely fair. We're wondering whether the motivation behind the lowered bid has something to do with the current financing environment; word on the street was that Roche was having a tough time assembling the necessary bank financing, given the current tight credit market. Humer says it intends to go to the bond market for financing now.
We're also wondering just what the Genentech folks are thinking now. Roche already owns some 56 percent of the company, and its execs say that relations remain friendly, despite the quote-unquote hostile bid. The Swiss company even disclosed some details of the deal that seem designed to placate Genentech talent: It intends to strengthen the Genentech brand, to maintain its HQ as a U.S. research site and to relocate some of its own U.S. ops to Genentech's campus. We hope to hear more from the Genentech side of the deal soon.