Swiss drug developer Roche boosted its hostile tender offer for biotechnology pioneer Genentech Inc to US$93 per share on Friday, raising the total offer value to US$45.7 billion, after its initial offer failed to pick up much support from shareholders.
For weeks, Genentech’s board had been calling Roche’s US$86.50 bid too low, with much of Wall Street saying shareholders likely wouldn’t bite at the offer.
In its statement on Friday, Roche said it received tenders for only 500,000 shares in the tender offer that was set to expire on Thursday, a tiny fraction of the 44 percent the company needs to take control of Genentech.
As of Feb. 6, Genentech has just more than 1.05 billion shares of common stock outstanding, of which Roche owned about 587.2 million.
It needs the support from a majority of the other shareholders to complete any deal.
The US$86.50 bid had been a surprise to many, following rejection of an US$89-per-share bid by Genentech’s board in July. The tender offer has been extended from Thursday to March 20.
In a Securities and Exchange Commission filing late on Friday, the company said it had raised about US$36 billion through a series of debt offerings. It expects to get the rest of the funding through a combination of debt financing, which could include private placements of notes, commercial paper and borrowings, or with available cash, the company said.
The latest statement from Roche didn’t say how the increased offer might affect its ability to raise additional funding.
“Based on conversations with Genentech shareholders, we believe that there is a strong sentiment to bring this process to a conclusion,” Roche Group chairman Franz Humer said in the statement. “As a result, we are increasing our price to US$93 per share to maximize shareholder participation and will proceed quickly to complete all necessary financing.”
Genentech advised its shareholders to take no action on the revised bid. A special committee of the board will make a formal statement soon, the company said.
On Monday, Genentech spent a four-hour meeting with analysts, detailing long-term sales and research projections to back up its assertion that the company was worth more than the Roche offer. In previous regulatory filings, Genentech said it could be worth up to US$112 per share.
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