Roche raises $16B for Genentech bid

Maybe Roche won't have trouble raising funds for its planned $42 billion buyout of Genentech after all. The company sold $16 billion in corporate bonds to help finance the acquisition, one of the largest corporate bond sales on record. (Number one: France Telecom's $16.4 billion bond sale in 2001.) And investors proved to be eager for the chance to buy the high-quality bonds.

Now all Roche has to do is get the board at Genentech as excited about the takeover as bond investors are. But both companies are far apart on the price. Roche is offering $86.50 a share and Genentech wants $112 for each share. Roche wants to buy out the 44 percent of Genentech it doesn't already own--but it has to play by some well defined rules.

Without a sale, analysts note that Roche could be stuck with a mountain of cash and the interest payments that come with it.

"Banks aren't in a position to lend, so you have to go to the markets first," Matt King, credit strategist at Citigroup in London, tells the Wall Street Journal. "This will be a big theme this year."

- read the report from the Wall Street Journal
- read the story from the Globe and Mail

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