Could Roche-Genentech Deal Price Actually Be Getting Lower?

(MoneyWatch)  Is the acquisition price for Roche to buy Genentech actually getting cheaper? That is the tantalising notion raised in a column in the FT today. BNET readers will remember that the Roche-Genentech deal is conspicuous by its absence because Roche literally couldn't find enough money to borrow to take care of the $44 billion cost of its $89-a-share bid.

Genentech's stock price hit the roof at $98 in the summer as the board rejected Roche's first overture. Holders expected the larger company to come back with a sweeter offer ... but then, history happened. Genentech has been grinding along at between $76 and $80 over the last few days. That means the $89 bid suddenly looks a lot sweeter -- assuming Roche can raise the money, which so far it cannot.

The FT makes this suggestion:

The original plan was to raise up to $45bn, allowing for a margin for manoeuvre, including the option of a modest price rise from its original $89-a-share bid for Genentech. With Genentech now trading at about $77 a share, the markets are clearly sceptical about the probability of a successful bid at the current price.

In current market conditions, Genentech's board of directors might want to reconsider their rejection of Roche's bid. There again, with many months likely required for it to raise the money, Roche itself might want to return with a lower price, or call off the proposal completely for now.

That would take some swallowing of pride. But if time is theoretically on Roche's side, with no one else likely to bid, the current impasse is a festering wound that does little for the morale of Genentech's employees or shareholders.

That would be an amazing turn of events: Roche holders, chagrined at having missed their chance at $89, being humbled by the stock market crash into taking something closer to $80 ... which, painfully, was the price before Roche came along.

• For more, see: BNET's Worst-Case Scneario for the Roche-Genentech Bid

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