This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Roche Bids for Rest of Genentech

Updated from 8:08 a.m. EDT

Swiss drug company Roche made an offer to take over the stake it doesn't already own in biotech behemoth Genentech (DNA) for $89 a share, or $43.7 billion.

Many observers on Wall Street will likely expect Genentech investors to view the bid as low, but they also probably see it has a preliminary approach. As evidence, shares of South San Francisco, Calif.-based Genentech, which closed at $81.82 on Friday, were surging past the Roche price in premarket trading Monday, rising 18% to $96.60.

Roche owns roughly 55.9% of the largest biotech by market cap. The proposal for the remaining 44.1% is an 8.8% premium to the company's closing price on the last trading day of the prior week and a 19% premium to the price a month ago.

Shares of Genentech have traded between $65.35 and $82.50 in the past year.

For Roche's part, the acquisition is expected to generate pretax cost savings of roughly $750 million to $850 million annually and add to earnings per share in the first year after the deal closes.

"In our view, the financial/operational synergies are clear," wrote JPMorgan analyst Geoffrey Meacham in a research note to investors. "That said, we believe the offer substantially undervalues Genentech's pipeline, particularly the Avastin opportunity for adjuvant colon as well as breast, prostate and non-small cell lung cancer ."

Roche said on a post-announcement conference call that the $89-a-share price was fair, however, Meacham expects the company to raise the price.

Lehman Brothers analyst Jim Birchenough said that comparable deals support a Genentech counterproposal of $120 a share and estimates an ultimate purchase price of roughly $105 a share.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,959.44 +154.64 0.87%
S&P 500 2,078.54 +7.89 0.38%
NASDAQ 4,781.4240 +16.0440 0.34%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs