Roche Seen Likely To Win Genentech With Latest Offer
09 March 2009 - 11:53PM
Dow Jones News
Roche Holding AG (ROG.VX) is likely to succeed in fully taking
over U.S. biotech company Genentech Inc. (DNA) after raising its
offer price for the 44% of shares it doesn't already own in the
U.S. biotechnology company, analysts said Monday.
Seeking to conclude an eight-months battle to gain full control
of Genentech, Roche on Friday increased its bid 7.5% to $93 a share
and extended its tender offer to shareholders until March 20. The
new offer values the deal at $45.7 billion.
"The raised offer significantly increases the likelihood of a
successful tender, while still preserving the assertiveness of the
transaction for Roche," said David Kaegi, pharmaceutical analyst in
Zurich with private bank Sarasin, who has a buy rating on the
stock.
Roche shares benefited from the market's newly-found belief in
the takeover's success. At 1215 GMT, Roche shares were up CHF3.20,
or 2.5%, at CHF132, while the Swiss market overall was lower.
Genentech's Special Committee of independent directors again
rejected Roche's offer as too low, but the chances that Roche will
succeed have vastly increased with the new offer, many analysts
said.
"Roche has held a series of meetings with shareholders of
Genentech in New York last week and the revised offer price may
reflect the feedback gathered during these meetings," said
Karl-Heinz Koch, pharmaceutical analyst in Zurich with independent
broker Helvea, who has a buy rating on the stock.
Roche, based in Basel, Switzerland, has raised around $36
billion at a cost of less than 5% through a series of bond issues
in major currencies. Together with the roughly $7 billion in liquid
funds that the drugmaker has on its balance sheet, it commands more
than $43 billion in cash to finance the transaction, Koch
estimates.
Roche has said it would proceed with the offer only if more than
half of the minority shareholders tender their shares by the new
deadline.
"The higher offering now increases the downside risk for
Genentech shareholders should the Avastin adjuvant colorectal data
be negative," Sarasin's Kaegi said.
An interim analysis of the data is expected next month. If the
study proves that Avastin, a top-selling cancer drug, works in
early stages of cancer, the drug's potential sales would skyrocket,
analysts say. A successful outcome of the study would also support
the valuation of Genentech, though Roche has said the benefit of
controlling Genentech aren't hinging on a successful outcome of the
study.
Company Web Site: http://www.roche.com
-By Anita Greil, Dow Jones Newswires; +41 43 443 8044 ;
anita.greil@dowjones.com