4-13 - (4/13/11) Jeff BuckalewRole of IB in M&A Head of...

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Unformatted text preview: (4/13/11) Jeff BuckalewRole of IB in M&A Head of North American Corporate AdvisoryGreenhill (advisory based Investment Bank) Spoke of Roches acquisition of Genentech In the 1990s, Roche owned all of Genentech but had to sell some of their shares in order to hedge against some outstanding liability suits. Later, Roche wanted to re-acquire Genentech in order to capitalize on some possible synergies. Up to that point, the firms had been working almost completely independent of each other. Since Roche was already the majority owner of Genentech, they felt that they did not need to pay a control premium, but the minority owners felt otherwise. This acquisition ended up being a hostile minority stake takeover as Roche tried to squeeze out minority holders in order to pay the lowest premium possible. Around the time this deal was being negotiated, the financial crisis took hold, so Roches offer was looking more and more attractive as they days wore on. The initial offer price was ~$89 and the asking price was ~$112The asking price was based on a revamped low cost company model. o Being that Roche was a majority owner, they had access to all of Genentechs financial information and business plan, so their initial valuation of the company was extremely accurate. In any kind of squeeze out attempt, minority investors are always protected under Delaware law. In the end, they had to raise the offer price to $93 after interactions with shareholders. o In order to get 99% of the shares, they had to raise the price to $95 (Acquisition ended in a friendly manner with a recommendation from the Board) STOCK MARKET REACTIONS TO M&A EVENTS (Event Studies, Case: BASF/Engelhard)- Event studies attempt to capture the market reaction to a specific event independent of general market gains or losses- Underlying concept is to estimate the abnormal return (stock gain or loss above any expected return that...
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This note was uploaded on 03/05/2012 for the course BUSI 599 taught by Professor Ravenscraft during the Spring '10 term at UNC.

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4-13 - (4/13/11) Jeff BuckalewRole of IB in M&A Head of...

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