Roche Case
Roche Holding AG: Funding the Genentech Acquisition
Financial Policy
March 5, 2015
Morgan Ephriam
Kristopher Kirkpatrick
Jasmine White
1. Statement of the Problem
In the case Roche Holding AG: Funding the Acquisition, Roche and Genentech are interested in an acquisition. Roche is acquiring about receiving all outstanding shares of Genentech. Roche Holding AG is a Switzerland-based pharmaceuticals and diagnostics company. It discovers, develops and provides diagnostic and therapeutic products and services from early detection and prevention of diseases to diagnosis, treatment and treatment monitoring. The Company has two divisions: Pharmaceuticals and Diagnostics. It operates worldwide containing the United States, Western Europe, Japan and Asia-Pacific, among others. Diagnostics include five areas: Applied Science, Diabetes Care, Molecular Diagnostics, Tissue Diagnosis and Professional Diagnostics. It operates in five geographical regions: Europe, Middle East and Africa (EMEA); North America; Asia-Pacific; Latin America, and Japan. Genentech is an American biotechnology corporation.
The acquisition during a time period where dramatic declines in American real estate prices and an overheated credit market were taking place. World markets were also down by 45%. Also during this time governments were investing in financial institutions. Banks also lowered interest rates for a number of reasons. Despite the uncertainty in the credit markets, corporate transactions were awakening in the pharmaceutical industry. During the time of the proposed acquisition Roche owned about 55.9% of Genentech and was considering buying all the remaining shares of the company at different prices per share. Roche was going to purchase the remaining shares for $89.00 per share but later offered to pay $86.50 a share due to changes in the market, which would require $42 billion in cash. In order to pay for this, Roche plans to pay $32 billion of the required $42 billion through
Financial Policy
March 5, 2015
Morgan Ephriam
Kristopher Kirkpatrick
Jasmine White
1. Statement of the Problem
In the case Roche Holding AG: Funding the Acquisition, Roche and Genentech are interested in an acquisition. Roche is acquiring about receiving all outstanding shares of Genentech. Roche Holding AG is a Switzerland-based pharmaceuticals and diagnostics company. It discovers, develops and provides diagnostic and therapeutic products and services from early detection and prevention of diseases to diagnosis, treatment and treatment monitoring. The Company has two divisions: Pharmaceuticals and Diagnostics. It operates worldwide containing the United States, Western Europe, Japan and Asia-Pacific, among others. Diagnostics include five areas: Applied Science, Diabetes Care, Molecular Diagnostics, Tissue Diagnosis and Professional Diagnostics. It operates in five geographical regions: Europe, Middle East and Africa (EMEA); North America; Asia-Pacific; Latin America, and Japan. Genentech is an American biotechnology corporation.
The acquisition during a time period where dramatic declines in American real estate prices and an overheated credit market were taking place. World markets were also down by 45%. Also during this time governments were investing in financial institutions. Banks also lowered interest rates for a number of reasons. Despite the uncertainty in the credit markets, corporate transactions were awakening in the pharmaceutical industry. During the time of the proposed acquisition Roche owned about 55.9% of Genentech and was considering buying all the remaining shares of the company at different prices per share. Roche was going to purchase the remaining shares for $89.00 per share but later offered to pay $86.50 a share due to changes in the market, which would require $42 billion in cash. In order to pay for this, Roche plans to pay $32 billion of the required $42 billion through