Are they or aren't they? Chugai spurns reports of Roche takeover talks

Roche CEO Severin Schwan

On Friday Bloomberg reported that Roche ($RHHBY) had pulled an abrupt 180-degree turn and decided to initiate takeover talks with Japan's Chugai, a company that the pharma giant already has a majority interest in. On Saturday Chugai, in no uncertain terms, said that was hogwash. But with M&A deals percolating around the global biopharma industry, investors bought in to the story anyway, driving up Chugai's stock price to record levels on the market buzz as fresh press reports added to the speculative frenzy.

This is Chugai's position: "Chugai is in no way in the process of reviewing any plan to become a wholly-owned subsidiary of Roche, nor discussing with Roche about such a transaction."

Roche, meanwhile, isn't commenting. But after Pfizer ($PFE) made an unsuccessful play for AstraZeneca ($AZN), a contradiction to industry dogma that all megamergers are snake bit, AbbVie ($ABBV) struck a deal to acquire Shire ($SHPG) and Valeant ($VRX) circles an angry Allergan ($AGN), any buzz about a potential buyout attracts plenty of eager investors looking to get into the game. And the Financial Times stepped in to add some substance to the report, saying that a deal could come as early as this week with Roche prepping a $10 billion offer for the remaining 40% stake in Chugai.

Roche may not be saying much now, but CEO Severin Schwan has made no secret of his aversion to the idea of a multibillion-dollar deal, which regularly comes up in interviews after Roche made Genentech into one of its subsidiaries.

Roche has been an eager buyer this year, but not at this level. Recent buyouts include a $1.7 billion deal for Seragon, which has its hands on a potentially revolutionary breast cancer drug, as well as its recent $450 million acquisition of Santaris. And Schwan told reporters just days ago that those kinds of small, targeted deals are the only kind of pacts that Roche is interested in for now.

Overall, the FT reports that merger activity has surged to record levels, with $260 billion in deals reported in the first 6 months of this year.

- here's Chugai's release
- read the report from the FT