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Genentech Acquisition by Roche: Will Innovation Wither?

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biotechnology management case

Mark J. Ahn1, Anne S. York2, David Ackerley3, Hannah A. Pearce3, Mark J. Calcott3, Natelle C. Quek3, Sonai Lim3, Rochene E. Higginson3, Hannah D. Hoang3, and David Lee1
1Atkinson Graduate School of Management, Willamette University; 2College of Business, Creighton University; and 3School of Biological Sciences, Victoria University of Wellington

Key Issue(s)/decision(s): Genentech received an unsolicited offer from Roche, who already owned 56% of the company, to acquire the remaining 44% for US$89.00 per share or US$43.7 billion—thus making Genentech a wholly owned subsidiary of Roche. After seven months of unsuccessful negotiations with the Genentech board of directors, Roche lowered its original offer price from $89.00 to $86.50 per share—and launched a tender offer directly to shareholders. Thus, minority shareholders had to decide whether to tender their shares directly to Roche, reject the offer, or hold out for a higher bid price. Further, if the acquisition was successful, shareholders also had to evaluate the potential for converting their current Genentech holdings into Roche shares based on their assessment of whether integrating with Roche would hamper Genentech’s edgy culture and innovation that has made them so successful to date.

Companies/institutions: Genentech, Roche

Technology: recombinant DNA, monoclonal antibodies

Stage of development: Marketed biopharmaceuticals

Indication/therapeutic area: oncology, immunology, and cardiology

Geography: US, Switzerland

Keywords: acquisition, biotechnology, cancer, culture, monoclonal antibodies

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Building the Case for Biotechnology is published by Logos Press