Roche offers $43.7 billion for full control of Genentech

By Julie A. Miller

Washington, July 21 - Swiss pharmaceutical giant Roche Holding AG has offered $43.7 billion - $89 a share - for full ownership of the U.S. biotechnology firm Genentech. Roche acquired a majority in Genentech in 1990 and currently owns 55.9% of all outstanding shares.

The offer represents a premium of 8.8% over the company's July 18 closing stock price.

Genentech said in a statement that a special committee of its board of directors, composed of the independent directors, will be convened promptly "to determine what action to take with respect to the proposal."

Roche said improved operational efficiencies would save $750 to $850 million per year.

"We are looking forward to working more closely with our colleagues from Genentech. We have great respect for their achievements and we will take the necessary steps to nurture Genentech's innovative and unique science-driven culture," Severin Schwan, CEO of Roche, said in a statement.

"The Genentech Founders Research Center will operate as an independent unit within the Roche Group to safeguard a diversity of different approaches and to foster the long term flow of novel breakthrough medicines. At the same time, we will be better able to share technologies and expertise in pharmaceuticals and diagnostics across the group and broaden the mutual access to the external innovation networks of both companies."

Roche's virology research would move to Genentech's South San Francisco, Calif., campus, which would become the company's U.S. headquarters. Its Palo Alto inflammation group would become part of Roche's Nutley, N.J., operation, which also conducts research in oncology. Roche's Pharma commercial operations in the U.S. will be moved from Nutley to South San Francisco.

The combined company's U.S. commercial operations in pharmaceuticals will reflect the Genentech name, Roche said, "leveraging the strong brand value of Genentech in the U.S. market." The existing U.S. sales organizations of both companies would be maintained.

Genentech's late stage development and manufacturing operations would be combined with the global operations of Roche. Roche's Nutley manufacturing facility would be closed and support functions, such as informatics and finance, would be consolidated.

The combined entity would be the seventh largest U.S. pharmaceutical company in terms of market share and would employ around 25,000 people in the United States. Roche is based in Basel, Switzerland.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.