It didn't take long for two salient facts to emerge this morning from the headlines about Roche's willingness to fork over close to $44 billion for all the shares of Genentech it doesn't already own. First, Roche isn't valuing Genentech high enough. That $89 a share offer may well get pushed to the mid-90s. And that gets us to point two: Genentech's startling success on the cancer side of the business will likely offer enormous financial clout to an expansive Roche. Genentech has been rapidly pointing its pipeline programs in a number of new directions, and that also would be particularly attractive to a company like Roche, which can use valuable euros to buy out U.S. assets.
Analysts are also pumping up the synergy theme here as well. But that line may not play so well with Genentech's rank-and-file workers, who will be wondering how the company will be streamlined after a merger.