The Morning Report
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The deal that could never get done is finally done, according to The New York Times and other news outlets. Roche, the Swiss pharma behemoth, agreed today to pay $46.8 billion for Genentech, the San Francisco-based biotech that has a 500-employee plant in Oceanside.
Roche will pay $95 a share to end an eight-month stalemate between the two companies that had gotten ugly in recent months. Last summer Roche had a deal on the table for about $44 million, but the Genentech board held out for more. In February, Roche not only went hostile with its bid, but lowered it to around $42 billion.
The Genentech board rejected the hostile bid, and originally countered with a demand of $112 a share. In recent days, news had leaked that the two sides were nearing a compromise. Still unclear is the fate of the employees at the Oceanside plant, which manufactures Genentech’s best-selling cancer drug Avastin. In September, we wrote about anxiety among employees about what Roche might do.
The Times story provided hints, but nothing concrete. Here is what the story said:
Now attention will turn to whether Roche can retain the top managers and scientists who have made Genentech so successful in developing drugs like the cancer medicines Avastin and Herceptin, which had combined global sales of nearly $9 billion last year. If not, Roche could end up ruining the operation that has been providing it with its biggest-selling products.
That the deal was finally accepted on friendly terms could increase the chances that Genentech’s people will stay. Moreover, the job market is not good right now.
Franz B. Humer, Roche’s chairman, expressed hope for retaining Genentech’s culture and people. “I think we now have clarity and we can together march forward,” he said in an interview.
A system of retention bonuses put in place last summer after Roche’s takeover effort started remains in place until June. That gives Roche and Genentech time to consider new plans for retaining employees it wants to keep, even as it plans some layoffs.
But Laurence Lasky, a Silicon Valley venture capitalist who was a scientist at Genentech for 20 years, said he doubted that Genentech’s culture would be able to survive for long.
“They’re Swiss, and Genentech is a bunch of California entrepreneurial cowboys,” Mr. Lasky said.
“I think it’s quite sad,” he added. “This is one of the great jewels of American corporate technology.”
Trust that I will continue to keep an eye on this story and report any news that affects the Oceanside folks.