Roche buys out Genentech with increased bid
pharmafile | March 12, 2009 | News story | Sales and Marketing |Â Â MA, RocheÂ
Roche has finally struck a deal to acquire Genentech after raising its cash offer, putting an end to a prolonged struggle for control of the biotech company.
The merger has been agreed after Roche raised its offer from $86.50 a share to $95, valuing Genentech at $48.8 billion – a figure the biotech's board says it deems 'fair'.
Dr. Charles Sanders, chair of the special committee of Genentech's board, said: "We believe this is a fair offer for Genentech shareholders, and the committee is pleased to come to a successful conclusion of this process. We look forward to working with Roche to complete the transaction as expeditiously as possible."
Roche, was already a majority shareholder in the US biotech, but had to acquire the remaining 44% of shares in order to undertake a full merger of the companies.
When Genentech's board rejected its first offer in July 2008, Roche was forced to turn hostile and approach Genentech shareholders directly in January, but this too failed to win support.
In finally securing the deal with its third offer, Roche has now called relations "friendly", and says the merged organisation will create a new leader in innovation.
Chairman of Roche Franz Humer said it offered clear advantages for the shareholders of both companies.
He added: "I am delighted that the intensive negotiations have led to a successful conclusion. Working together, we aim to close the transaction quickly, thus removing uncertainty for employees and allowing us to focus even more intently on innovation and long-term projects. We have tremendous respect for our colleagues at Genentech and look forward to working with them to further accelerate our search for solutions to unmet medical needs."
The two companies have worked together for more 18 years and have co-developed a series of breakthrough cancer products, including Avastin, Herceptin and MabThera/Rituxan, which Genentech markets in the US, and Roche markets in the rest of the world.
Roche says the combined company will be the seventh largest US pharmaceuticals company in terms of market share, generating approximately $17 billion in annual revenues.
It will employ around 17,500 employees in the US pharmaceuticals business alone, including a combined sales force of approximately 3,000 people.
The combined US commercial operations in pharmaceuticals will operate under the Genentech name, using the strong brand value the company has built up in its home market.
The merger represents the third major deal this year in the industry, following the Pfizer/Wyeth merger and the Merck's offer for Schering-Plough. Analysts predict further consolidation across the sector.
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