UPDATE: Roche Chairman: $112/Share Not Realistic For Genentech
March 10 2009 - 5:30AM
Dow Jones News
Roche Holding AG (ROG.VX) Chairman Franz Humer said Tuesday the
Swiss drugmaker doesn't consider the $112 a share price for
Genentech Inc. (DNA) proposed by Genentech directors as a condition
to agree to a takeover as realistic.
Humer was speaking to shareholders at the company's annual
general meeting in Basel, Switzerland.
Roche Friday increased its offer to buy the roughly 44% of U.S.
biotechnology company Genentech Inc. (DNA) it doesn't already own,
in a deal worth around $45.7 billion. The value of the deal
reflects a price of $93 a share.
"Numerous conversations with Genentech's 10 biggest shareholders
have shown us that there is a strong sentiment to bring this
process to a swift and fair conclusion," Humer said. "As a result,
on March 6, we adjusted our offer to $93 a share," he added.
The bid was again rejected as too low by Genentech's special
committee of independent board members. Monday, the Wall Street
Journal reported the two companies are close to agreeing a deal at
a price of $95 a share.
Humer said assumptions on which the committee bases its asking
price are flawed.
"We feel the price proposed by the special committee, $112 per
share, isn't based on realistic assumptions," Humer said.
Overly optimistic assumptions include, the committee's view
about the potential impact from follow-on biologics, or generic
copies of biotechnology drugs that lost patent protection. The
committee also overestimates productivity gains and the potential
increase in success rates in research and development, he
added.
Roche also considers the committee's view on the market
potential of cancer drug Avastin in new uses, and possibilities for
price increases in the U.S. market as either inadequate or overly
optimistic, Humer said.
Roche has raised close to $40 billion through various bond
offerings to finance the deal. Given that the Swiss drugmaker
commands around $7 billion in liquid funds already, financing of
the deal looks secure, analysts say.
Company Web site: www.roche.com
-By Anita Greil, Dow Jones Newswires; +41 43 443 8044;
anita.greil@dowjones.com