Genentech, Roche Deal Hits Snag
By MATTHEW KARNITSCHNIG and DANA CIMILLUCA, WSJ
Deal talks between Genentech Inc. and Roche Holding AG have hit a snag over dueling interpretations of arcane U.S. Securities and Exchange Commission rules, but the problem is unlikely to derail the transaction, according to people familiar with the matter.
The two drug makers have agreed in principle on the terms of a deal that would value the 44% of Genentech that Roche doesn't already own at $46.7 billion, or $95 per share. But efforts to reach an agreement have been hampered by Roche's outstanding tender offer for Genentech shares, which expires on March 20. The two camps were scrambling Wednesday to resolve the problem.
The issue holding up the deal is how long Roche needs to leave the tender open after reaching an agreement with Genentech's board. A longer period would create a problem for Roche. It wants to sew up the deal before April, when a drug trial on Genentech's new cancer treatment, Avastin, is to be published, say people familiar with the matter. Roche is concerned that Genentech's shareholders would hold out for more money if the results are better than expected. A Roche spokeswoman had no immediate comment, and a Genentech spokesperson declined to comment.
Speculation spread through the market on Tuesday that there was a dispute between the two camps over amending Genentech's so-called "affiliation agreement" with Roche, which sets forth the conditions Roche must meet to complete a merger, but people close to the transaction downplayed those concerns.
In order to reach a deal Genentech must agree to amend the agreement by dropping certain conditions. Those issues have largely been resolved, says a person familiar with the matter, and aren't a major issue in the current negotiations.
Roche, based in Switzerland, needs to receive consent from holders representing 90% of Genentech's outstanding shares to secure full ownership of the company. |
