By Mary Welch
Staff Writer
Roche Holdings Inc. plans to sell 17.3 million more shares of Genentech Inc.s stock, a move that would reduce its holding in Genentech from 65.6 percent to 58.9 percent. If those 17.3 million shares were offered at Thursdays opening price of $209.75, it would gross Roche about $3.63 billion.
The market, however, reacted somewhat negatively to the news, as Genentechs stock (NYSE:DNA) closed Thursday at $187.50, down $22.25, or 10.6 percent. There currently there are 260 million shares outstanding.
In addition, Roche, of Basel, Switzerland, granted the underwriters an overallotment option on another 1.7 million shares. J.P. Morgan, of New York, is the lead underwriter. Also underwriting are Goldman, Sachs & Co.; Merrill Lynch & Co.; Warburg Dillon Read LLC; Lehman Brothers; and Robertson Stephens Inc., all of New York.
If the overallotment were fully exercised, the offering would be worth $4 billion at Thursdays opening price.
Roches sale of stock gives people more access to our stock, which is what they want, said Genentech spokeswoman Marie Kennedy. Its completely Roches decision.
Roche Holdings Inc. is a Delaware corporation that is an indirect, wholly owned subsidiary of F. Hoffmann-LaRoche Ltd., of Basel, Switzerland. In 1990, Roche and Genentech made a deal under which Roche invested $492 million in South San Francisco-based Genentech, and purchased half of the companys stock at $36 per share, which gave Roche 60 percent ownership of Genentechs stock.
Last June, Roche exercised its option to purchase the remainder of Genentech at $82 per share. Roche then turned around in July and sold 22 million pre-split shares of Genentech to the public at $97 apiece, grossing $2.1 billion, and then sold another 20 million pre-split shares at $143.50 for another $2.9 billion.
On Nov. 2, Genentech had a two-for-one stock split.
On Jan. 19, Roche completed an offering of zero-coupon notes that are exchangeable for 6.5 million Genentech shares held by Roche.