By Mary Welch
Roche Holdings Inc. brought in $2.8 billion by selling 17.3 million shares of Genentech Inc. at $163 each, a gross that was less than anticipated when Roche filed to sell the shares two weeks ago and Genentech's stock was at $209.75. At that price the offering would have grossed $3.63 billion.
The stock sale reduced Roche's ownership of Genentech to about 59 percent from 65.6 percent. The underwriters have an option to purchase another 1.7 million shares to cover overallotments. If the overallotment is exercised, Roche's ownership of South San Francisco-based Genentech will be about 58 percent.
J.P. Morgan & Co., of New York, is the lead manager. Goldman, Sachs & Co., Merrill Lynch & Co., Warburg Dillon Read LLC, Lehman Brothers Inc. and Robertson Stephens Inc., all of New York, are co-managers.
Prior to the sale, Genentech had 260 million shares outstanding.
Genentech will not receive any of the net profits from the transaction, which is expected to close Wednesday.
"We are pleased with the sale," said Sabrina Johnson, Genentech's director of corporate communications. "It broadens our shareholder base and increases liquidity, which in the long term is a positive thing."
Roche Holdings 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 Genentech, giving it a majority stake in the company.
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 each, 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 2-for-1 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.
Genentech's stock (NYSE:DNA) closed Friday at $162, down $5.312.