Genentech is one of the earliest and most successful biotech companies out there, but can it stay biotech's golden child following a buyout by Roche? That's the question on at least a few industry minds in light of Roche's offer to buy the remaining 44 percent of Genentech. While its director's haven't responded to the bid, analysts are saying the offer of $89 per share (for a total of $43.7 billion) is too low.
At least one biotech analyst weighed in, and quite harshly, on the potential deal. In a note to investors, Geoffrey Porges wrote, "The most important part of Genentech's value is in soft assets--the world-leading scientists, the culture, the single site, the values and history," adding, "Many of these will walk out the door if the company becomes simply a research subsidiary of Roche. If this deal closed, we believe Roche will be judged in the future to have killed one of the great research entities in the industry's history." Porges is a biotechnology analyst at Sanford C. Bernstein.
Roche has owned the majority of Genentech stock for some time, but Genentech retained strong autonomy. With a full stock buyout, will Genentech be swallowed up by a pharma giant, as other biotechs have? Will it lose its California culture? Will it lose its most talented employees?
"We will do everything to preserve the unique and science-driven culture of Genentech, something which made Genentech so successful and something we want to build on," Severin Schwan, Roche's CEO, told the Wall Street Journal. Still, the employee question is one that awaits an answer. Members of the Roche management team tried to lay fears to rest earlier this week by focusing on the opportunities that the purchase would bring, but the likelihood of a move to California coupled with clashing cultures could mean some pretty big challenges are ahead for both companies.
We know you're following this story as closely as we are, so stay tuned.