Roche is set to up the ante in its offer for Genentech, the Financial Times reports. The new per-share price will be about $95, the newspaper says, quoting unnamed sources. At that price, the deal would be worth some $44 billion, with about $30 billion to $35 billion of that in debt. The sweetened bid will be pitched to Genentech's board sometime before Roche's year-end numbers are due in early February.
That's big news, considering the fact that Roche has held tight on its offer for months now. But even bigger news could be Roche's financing for the deal. The FT reports that Roche has a handshake deal for $25 billion with a syndicate of 10 banks led by HSBC and JP Morgan. If that's so, then this buyout deal is on the vanguard of corporate financing. Credit has been tough to get since the markets froze over in October, but the ice appears to be breaking now; a recent "flurry of corporate bond issues" helped encourage the Roche banks to make this deal.
Here's how the financing would break down, the FT says: Roche has $9 billion in cash. It could generate another $4 billion if it decided to forego this year's dividend. It has a $10 billion revolving credit line ready to be re-signed. Together with the new $25 billion line, that would boost the total over $44 billion.
Roche, however, says it has no intention of passing on this year's dividend. Last year, the company said it would increase its payout to shareholders every year for the next three. It won't comment on the possibility of a sweetened offer for Genentech.