A Medical Device DailyDiagnostics giant Roche (Basel, Switzerland) reported that it has sweetened its offering price for all outstanding publicly-held shares of Genentech (South San Francisco, California) from $86.50 up to $93 per share and extended the offer to midnight, EST, on March 20. All other terms and conditions of the tender offer remain unchanged. The latest bid adds up to about $45 billion to the hostile bid price.
"Based on conversations with Genentech shareholders, we believe that there is a strong sentiment to bring this process to a conclusion. As a result, we are increasing our price to $93 per share to maximize shareholder participation and will proceed quickly to complete all necessary financing. We now look forward to successfully completing the transaction," said Franz Humer, chairman of the Roche Group.
As of the close of business on March 5, about 500,000 shares had been tendered pursuant to the offer In its statement Friday, Roche said it received tenders for only 500,000 shares in the tender offer that was set to expire March 12, a tiny fraction of the 44% the company needs to take control of Genentech.
As of Feb. 6, Genentech had just over 1.05 billion shares of common stock outstanding, of which Roche owned about 587.2 million, or about 55.8% of the outstanding shares of Genentech.
Funding on Roche's side, though, may still remain an issue. In an SEC filing earlier Friday, the company said it had raised about $36 billion through a series of debt offerings, and it calculated the $86.50-per-share bid to cost about $42.1 billion. It said the rest of that funding could be raised through a combination of debt financing, commercial paper, or existing credit facilities, among other methods.
Greenhill & Co. is acting as financial advisor to Roche and Davis Polk & Wardwell is acting as legal counsel in connection with the tender offer.
In a statement, a special committee of the board of directors of Genentech urged its shareholders to take no action at this time with respect to Roche's revised tender offer to acquire all of the outstanding shares of Genentech stock not owned by Roche at a price of $93 in cash per share.
The committee said it intends to take a formal position regarding the revised Roche offer promptly, and will explain in detail its reasons for that position by filing a statement with the SEC.
Last month (Medical Device Daily, Feb. 11, 2009), the special committee of the board of directors of Genentech urged the company's shareholders to take no action at that time with respect to the hostile tender offer commenced by Roche to acquire all of the company's outstanding shares not owned by Roche at a price of $86.50 in cash per share, which was $2.50 less per share than what Roche originally offered to buy the company for last July (MDD, July 22, 2008).
The Genentech special committee is represented by Goldman, Sachs & Co. and Latham & Watkins. Genentech is represented by Wilson Sonsini Goodrich & Rosati.
In other dealmaking news:
• SETO Holdings (Briarcliff Manor, New York) reported that it signed a letter of intent under which it agreed in principle to issue shares of its common stock to acquire 100% of the capital stock of Advanced Hearing Centers (AHC; Laurel, Maryland) and to sell all of SETO's current industrial ceramics fabrication and contract manufacturing businesses to Eugene Pian, SETO's president, in exchange for all the shares of SETO common stock he owns.
At closing, Pian would resign as an officer and director and cease all affiliation with the public company, whose name would be changed to Lotus Holdings. Sanjay Srivastava, Lotus' founder/CEO, would own 90% of the outstanding common stock of the public company and he would become president/CEO of that company; and there would be issued and outstanding 77,923,120 shares of the company's common stock, of which the public shareholders would own 7,792,312 shares, or 10%.
The company would then seek to raise additional capital through a private placement, using the proceeds to help finance the expansion if its hearing centers. In addition Srivastava intends to have the public company make appropriate filings with the SEC to become subject to the reporting requirements of federal securities laws.
• Grubb & Ellis Healthcare REIT (Santa Ana, California) said it has acquired Wisconsin Medical Office Buildings Portfolio, an aggregate of four medical office buildings located in the Greater Milwaukee area. With buildings in Menomonee Falls, Milwaukee, Richfield and Mequon, the portfolio consists of approximately 185,000 square feet of gross leaseable area.
"This is a sale/leaseback transaction with one of the leading providers of healthcare services in Wisconsin," said Scott Peters, CEO/president, Grubb & Ellis Healthcare REIT.