Is Roche hostile...or playing M&A games?

Just as Pfizer's bid for Wyeth prompted all sorts of chatter, so has Roche's new-and-lower offer for the 44 percent of Genentech it doesn't already own. Here's a sampling:

  • The New York Times DealBook has a legal analysis of Roche's move under Delaware law and under the Roche-Genentech affiliation agreement, which governs their relationship. Because of various contract intricacies that we'll let the NYT explain to you, DealBook thinks Roche doesn't really intend to do a hostile takeover, but to push Genentech to make a friendly deal.
  • Analysts tell CityAM that Genentech's shareholders should take Roche's offer because it's likely the best they're going to get. "If nobody else comes along and makes an offer the shares will fall right back down again," one told the newspaper. "It is a bold move by Roche and should be commended."
  • Meanwhile, the market thumbed its nose at the offer, sending Genentech stock down to $81.24 on Friday, compared with Roche's offer of $86.50. Apparently, investors don't think the shareholders will bite. 
  • The Wall Street Journal predicts that Roche will raise its bid, but not too much higher than the original $89, because for every additional dollar per share, Roche needs another $465 million. And the company has already ranged far and wide, looking for financing. The "hostile" offer is a move-the-ball-along tactic, the reporters conclude, because Roche wants to get the deal in the can before the anticipated Avastin data hits in a few months.

What does Genentech itself say? The board's special committee asked shareholders not to act until it has a chance to evaluate the offer and reiterated its previous assessment: that Roche has undervalued Genentech. The committee also took its chance to chastise Roche a bit, saying that it's "disappointed" that Roche has taken "this unilateral and opportunistic step." The panel will issue a decree within 10 business days.

- here's Genentech's statement
- see the DealBook post
- check out the story at CityAM
- read the WSJ Health Blog story
- check out the analysis from the WSJ

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