Roche makes hostile bid for Genentech

Not to be left out of the big buyout spree, Roche announced today that it's bid to acquire Genentech has gone hostile. The Swiss drugmaker, which has been trying since July to purchase the 44 percent of Genentech it doesn't own, had previously offered $89 a share for the biotech company. But citing a "lack of progress towards an agreed transaction," Roche has cut its per share offering to $86.50. That brings the total for the deal to $42.8 billion, down from $44 billion.

"We are disappointed that the discussions over the last six months between Roche and the special committee of Genentech have not produced a negotiated agreement," said Chairman Franz Humer (photo) in a statement. "We feel it is now time to give the Genentech minority shareholders the opportunity to decide on our offer. Especially in the current market environment the offer provides an opportunity for all public shareholders to achieve liquidity and to receive a fair price for all their shares."

The bid may appeal to some Genentech shareholders who are eager for cash in a difficult financial environment. But the Wall Street Journal notes that Roche could shoot itself in the foot if the hostile bid causes key scientists to leave Genentech, though Humer said he was confident that wouldn't be the case. Genentech was recently named to Fortune's annual list of the best employers, due partly to its resistance to Roche's bid, as well as planned retention bonuses and severance packages for employees. Rumors have also surfaced that a mega-merger would crush Genentech's innovative culture, which is responsible for the company's ongoing success.

Analysts have questioned how Roche plans to pay for the massive buyout during an economic crisis. In the statement, the company said it was confident it could finance the deal using a combination of its own funds, commercial paper, bonds and a traditional bank financing.

- here's Roche's statement
- read the WSJ article