Roche Buyout: For Genentech (DNA), A Game Well Played
Before Roche decided to try to buy the 44% of biotech company Genentech (DNA) that it did not already own the smaller firm traded at $75. Roche offered just over $86 a share. Genentech said “no.” After months of bargaining,…
Before Roche decided to try to buy the 44% of biotech company Genentech (DNA) that it did not already own the smaller firm traded at $75. Roche offered just over $86 a share. Genentech said “no.”
After months of bargaining, Genentech got a price of $95, a 26% premium over where it traded before the first offer was made. What is more extraordinary is that, while the bickering over price went on, the DJIA dropped 40%. A big premium became, by comparison to the markets, a huge one.
So, the Genetech board hung on to get a better deal and Roche gave in and will write a check for $47 billion.
Genentech played a good game. The firm always knew that Roche desperately needed to buy it. Genentech has a number of very valuable drugs, and they are biotech products which are hard to re-engineer. Roche, like most other Big Pharma operators, has products which will lose patent protection soon. Generic drug companies will step in and offer must less expensive versions of those treatments.
Big Pharma is dying. Biotech has become the future of the industry. Last year, Genentech made $5.3 billion of profit on $13.4 billion in sales. It has more than $9 billion in cash and long-term investments and adds to that pile each quarter. That speak volumes.
Douglas A. McIntyre
Contact [email protected] for any questions or corrections.
Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
