100%(21)21 out of 21 people found this document helpful
This preview shows page 1 - 5 out of 12 pages.
Case 14ROCHE HOLDING AG: FUNDING THE GENENTECHACQUISTION Group A Team MemberJuthatip Khaovisate 5949005Phantida Pukpinyo 5949007Kamonchat Vonglodjanaporn 5949024Chanjilar Panyakorn 59490381
COMPANY BACKGROUND AND CURRENT SITUATIONROCHE HOLDING AG (ROCHE)Roche was founded by a 26-year-old Swiss banker named Fritz Hoffman-La Roche in 1894. He had joined with Max Carl Traub to take over Basel’s Grenzaxherstrass from druggist Bohny, Hollinger & co. In the earlier years, the company’s primary products included sleeping agents, antiseptics, and vitamins.In the year 1930s, the company expanded to 35 countries and expansion that continued in the decades following the Second World War and in 1990, the company was known as Roche, and acquired majority stakes in Genentech for USD2.1 billion. GENENTECH Genentech was a South San Francisco technology company. The company was founded in 1976 by venture capitalize named Robert A. Swanson and a biochemist named Harbert Boyer. Genentech’s research focused primarily on developing products based on gene splicing or recombinant DNA to treat disease such as cancer and AIDS.CURRENT SITUATIONThe acquisition made Roche a strong foothold in the emerging biologics market as well as stronger presence in the U.S. market. By the end of 2008, Roche’s total revenue was CHF50 billion, the pharmaceutical division contributed 70% of the total revenue and over 90% of operating profit. Clearly, Roche was one of the leading pharmaceutical in the world.2
Q1: What are the business and financing risks associated with the acquisition of Genentech?
To conclude, this is not a good time for deal due to the current market condition. As accordingto the case that over the past 18 month there has been a dramatic decline in equity and creditmarket and the world equity market prices had declined over 45%.Also the company might face