Roche Offers to Buy All Remaining Shares of Genentech

Roche, a healthcare giant and present owner of nearly 56% of Genentech, announced that it has proposed to acquire all remaining shares in the pioneer biotechnology company for about US$43.7 billion.

Genentech responded by forming a special committee composed of three directors independent of Roche to assess what action to take with respect to the proposal.

Charles A. Sanders, the chairman of Genetech's special committee, said, The special committee intends to proceed in a timely manner to review the Roche proposal, which was both unsolicited and unexpected. The outcome of this process has not been pre-determined, and there can be no assurance that the special committee will approve any transaction with Roche.

The transaction, as well as the conditions to its consummation, will be determined through negotiations with the independent directors. It is anticipated that, in addition to customary conditions, the merger would be subject to the approval of holders of a majority of the Genentech outstanding shares not held by Roche.
Franz Humer, Chairman of Roche, commented, Our long and successful participation in Genentech has provided great benefits to both of our companies and shareholders. It has resulted in one of the biggest success stories in the healthcare industry. Roche's significant investment in Genentech over many years has helped it to focus on innovation and long-term projects, leading to some of the most important breakthroughs in the treatment of cancer and other life-threatening diseases.”

Roche intends to maintain Genentech's unique research culture and keep the South San Francisco site operating as an independent research and early development center, and become headquarters of combined U.S. commercial operations.

The combination of the companies will enhance innovation by allowing for diverse approaches to problem solving, while promoting the sharing of intellectual properties, technologies, partnerships, and other key assets. In addition, benefits derived from improved operational efficiencies, and the elimination of duplications are expected.

Genentech Dissatisfied with Roche Buyout Offer

In mid August 2008, the special committee of Genentech, formed to consider Roche's offer to buy all of Genentech's outstanding, shares expressed its dissatisfaction with the tender first made in July 2008.

The committee turned down Roche's US$43.7 billion bid, stating that the offer substantially undervalues the company, but added that they would consider a proposal that recognizes the true value of Genentech as well as the benefits that Roche would realize resulting from full ownership of the biotech pioneer.

Dr. Charles A. Sanders remarked, "The special committee is confident in the company's strong financial and clinical momentum and its uniquely productive R&D capabilities, which will continue to enhance shareholder value. In addition, we look forward to the company maintaining its successful relationship with Roche, regardless of ownership structure."

Roche, is likely to move quickly to seal the deal. Analysts expect that Roche may end up paying around 20% premium over the initial offer of about $89 per share of Genentech.

Headquartered in Basel, Switzerland, Hoffman-La Roche is one of the world's leading research-focused healthcare groups in the fields of pharmaceuticals and diagnostics. Roche leads the world in the field of in vitro diagnostics and drugs for cancer and transplantation, and is a market leader in virology. Roche is also active in other major therapeutic areas such as autoimmune diseases, inflammatory and metabolic disorders, and diseases of the central nervous system. Roche employs 80,000 worldwide and it had over CHF 46 billion in sales.

Genentech is a leading biotechnology company that discovers, develops, manufactures, and commercializes medicines to treat patients with significant unmet medical needs. The company with over 100 projects in development is headquartered in South San Francisco, CA, USA, and had total operating revenues of US$11.7 billion in 2007.

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