M&a Case Roche

1653 Words Nov 23rd, 2014 7 Pages
Roche’s case analysis questions 1. Why is Roche seeking to acquire 44% of Genentech it does not own? From Roche’s point of view, what are the advantages of owing 100% of Genentech? What are the risks?
Answer 1:
The following are the advantages for Roche which will accrue by owning 100% of Genentech: * Genentech in the current form had become an important part of Roche’s business, accounting for 24% of Roche’s pharmaceutical product sales in 2008. Several of Genentech’s pioneering products had achieved very strong market positions due to their medical differentiation, commanding high prices. Products originating from Genentech represented 46% of total sales of Roche’s 20 top-selling drugs on a worldwide basis. For example,
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If the two companies were merged, Roche would have unfettered access to Genentech’s cash. * A major reason for 100% ownership was the product licensing agreement that was due to expire in 2015. This license gave Roche the right to opt in to develop and commercialize Genentech’s products outside the USA. This gave Roche access to many important products from Genentech’s products. The terms of this agreement allowed to sell this license at the end of 2015 to the highest bidder, which could have a detrimental effect on Roche
The risks involved in the complete ownership were as follows: * Genentech had a very unique culture which a result of the working style of their CEO Levinson. The announcement of ownership might cause few of the star scientist and researchers to leave Genentech to explore opportunities with their rivals, which would be a major risk. * The combined entity wanted to decrease duplication of efforts in the manufacturing, operations and R & D. However especially in the case of R&D, the maintaining of unique and innovative methods at Genentech to achieve a diverse approach to research and early development efforts was imperative.

2. As a majority shareholder of Genentech, what responsibilities Roche’s have to the minority shareholders?
Answer 2:
To protect the minority shareholders of

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