A special committee of Genentech board members has rejected Roche's hostile bid of $86.50 a share, saying the offer "substantially undervalues" the biotech giant. In what a host of analysts swiftly determined was a simple effort to extract a better price for the 44 percent chunk of stock Roche doesn't already own, the committee made its case that Genentech's successful history of drug development as well as its strong financial position should command a higher offer. Genentech is demanding $112 a share.
"Genentech's strong projected financial performance implies a valuation substantially in excess of Roche's offer price," said Genentech Chairman Charles Sanders. Roche replied that it's also made its economic case clear and that it's now "up to the shareholders to decide on our offer."
Several analysts say that Roche is likely to follow the same course it took with Ventana. The pharma giant made a hostile offer at $75 a share and then sweetened the bid to an acceptable $89.50. But Andrew Pollack at the New York Times notes that the tug of war over the stock price could change dramatically in April when Genentech reports data on Avastin for colorectal cancer. Positive data on a new cancer indication could push Genentech's stock past the $100 mark, leaving Roche far behind. Or, a negative bottom line could send shares below $70, making Roche's offer look plenty sweet.
- read the story in the Wall Street Journal
- read the report in the New York Times