Roche Assignment
1) Why is Roche seeking to buy the 44% of Genentech it does not own? From Roche’s point of view, what are the advantages of owning 100% of Genentech? What are the risks?
Roche is looking at this acquisition as a source of internal growth; the advantages are for research reasons, cutting cost creating a synergy by eliminating duplication of efforts and having easily access to Genentech’s free cash flow optimizing tax issues.
Some analyst are concern that Genentech would lose its independence for pursing its own projects, allocate enough amount of money to Research and Development, and its key Scientifics and top management might leave the company.
2) As a majority shareholder of Genentech, what responsibilities does Roche have to the minority shareholders?
Obtain approval of a majority of the minority of Genentech shareholders voted at the meeting concerning the merger, if not satisfied Roche should pay the fair value for Genentech stock determinate by independent investment banks
Also Roche could not share in Genentech’s intellectual property if it didn’t own 100% shares; the merger would facilitate product development and research between the two companies.
3) As of June 2008, what is the value of the synergies Roche anticipates from a merger with Genentech? Assess the value of synergies per share of Genentech. Please use a 9% WACC in your analysis
I consider only the synergies from the merger, and divided by the outstanding Genentech shares, in the article was mentioned that some (cost reductions) efficiencies could be achieve by Roche by itself after the analysis
4) Based on DCF valuation techniques, what range of values is reasonable for Genentech as a stand-alone company in June 2008? Please exclude synergies from your valuation and use a 9% WACC. You can assume that at the end of June 2008, Genentech held approximately USD 9 billion in cash, which included investments and securities that were not needed in its daily
Roche is looking at this acquisition as a source of internal growth; the advantages are for research reasons, cutting cost creating a synergy by eliminating duplication of efforts and having easily access to Genentech’s free cash flow optimizing tax issues.
Some analyst are concern that Genentech would lose its independence for pursing its own projects, allocate enough amount of money to Research and Development, and its key Scientifics and top management might leave the company.
2) As a majority shareholder of Genentech, what responsibilities does Roche have to the minority shareholders?
Obtain approval of a majority of the minority of Genentech shareholders voted at the meeting concerning the merger, if not satisfied Roche should pay the fair value for Genentech stock determinate by independent investment banks
Also Roche could not share in Genentech’s intellectual property if it didn’t own 100% shares; the merger would facilitate product development and research between the two companies.
3) As of June 2008, what is the value of the synergies Roche anticipates from a merger with Genentech? Assess the value of synergies per share of Genentech. Please use a 9% WACC in your analysis
I consider only the synergies from the merger, and divided by the outstanding Genentech shares, in the article was mentioned that some (cost reductions) efficiencies could be achieve by Roche by itself after the analysis
4) Based on DCF valuation techniques, what range of values is reasonable for Genentech as a stand-alone company in June 2008? Please exclude synergies from your valuation and use a 9% WACC. You can assume that at the end of June 2008, Genentech held approximately USD 9 billion in cash, which included investments and securities that were not needed in its daily