Roche-Genentech Deal: $95 Bid Coming by February
UPDATE: Roche CFO Erich Hunziker confirmed that the Genentech bid was “on track” and said this about jobs at Genentech: “the cuts we intend to do at Roche are much tougher” than any planned for Genentech, he said, according to Bloomberg. Roche won’t “kill the hens that laid the golden eggs,” Hunziker said.
Genentech stock rose from around $84 to around $86 on news that Roche is indeed going ahead with its bid to acquire the company. The FT reports Roche is look at $95 a share for the 44 percent of the company that it does not yet own. The timing of the bid will before early February, the paper said.
The company had previously offered $89 a share last summer, but Genentech turned that down, seeking a higher bid. This guy thinks the price is going even higher:
“There’s no way to know how credible this report is,” said BMO Capital Markets analyst Jason Zhang, in a telephone interview. “Roche is serious about this, they want to finish the deal, but $95 isn’t high enough to get the deal done. You have to get above $100 a share.”
Roche also said it would continue its dividend payouts. Some thought it may scrap its payouts in order to collect enough cash to buy Genentech.
As BNET readers know, whether Roche can actually raise enough cash to buy Genentech is an open question. The company initially bid $89 in summer, but then went silent as summer turned to fall and then winter.
Then it emerged that there simply wasn’t enough credit available on the markets for Roche to finance the $45 billion deal.
In December, with Roche struggling to out together financing an the markets tumbling, there was speculation that Genentech may be forced to take a lower bid than $89 in order for holders to collect a premium on the deal.
Looming behind the deal is the open question of whether the clash of cultures between Roche and Genentech could end up destroying the value Roche seeks to acquire.
- BNET’s Previous Roche-Genentech Coverage:
- Could Roche-Genentech Deal Price Actually Be Getting Lower?
- Roche Doesn’t Have Enough Money for Genentech Deal
- Roche Genentech Deal Conspicuous By Its Absence
- A Worst-Case Scenario in the Roche-Genentech Deal
Image by Flickr user RangerRick, CC
Jim Edwards, a former managing editor of Adweek, has covered drug marketing at Brandweek for four years, and is a former Knight-Bagehot fellow at Columbia University's business and journalism schools. Follow him on Twitter or send him an email.
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