Roche-Genentech Biotech War-And the Victor is Roche at $95 a share

March 12, 2009

(ChattahBox) — Big news in the pharmaceutical industry! Today, the Swiss drug giant, Roche Holding AG announced its winning bid to buy all remaining shares of the US Biotech Company, Genentech Inc. at $95 a share for a total outlay of $46.8 billion. Roche will now get its hands on Genentech’s reported cash flow of $10 billion. Roche will also get all the revenues from the new and much hyped cancer drugs, Avastin and Herceptin.

After months of fierce battling between these two drugmakers, it quickly turned into a hostile takeover last summer by Roche. During this war between the two drug companies, shares of Genentech fell and financial analysts got on the airwaves doubting Roche’s ability to raise the cash. With enough money raised in the bond market, Roche finally raised its lowball hostile offer last week, from $86.50 to $93 per share, with the final deal approved by Genentech’s stockholders at $95 a share.

Although Roche was not forced to buy Genentech at over $100 a share, like many predicted, the Swiss drugmaker still paid nearly 22 times Genentech’s forecast earnings through 2010. Still, this deal will grant a new infusion of cash from revenues of new drugs. Drugmakers all over the globe are eagerly searching for sources of revenue as patents are due to expire on numerous prescription medications.

The two dueling CEOs, Franz B. Humer of Roche and Arthur Levinson of Genentech will get together quickly to dispel any rumors of worker layoffs and to also stem the tide of any vital researchers jumping ship for other drug companies. Humer is said to be anxious to find ways of keeping key clinical and sales staff, but may look at other areas to make cuts.

The Roche buyout represents one of the top three major pharmaceutical deals finalized just this year with Pfizer Inc.’s deal to acquire drug giant Wyeth at $68 billion. Roche will be following closely, the upcoming drug trials of the cancer drug, Avastin. It’s relying on the new cancer drugs to boost revenue through the next five years.


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