Roche is cutting the amount of money it is offering for Genentech (NYSE: DNA) from $44 billion, or $86.50 a share, to $42 billion. The Genentech board had hoped for a higher price, but Roche may find itself hampered by the credit crisis.
According to Reuters, ""Roche had initially aimed to acquire the remaining shares through a negotiated settlement -- an offer rejected by Genentech -- and decided to appeal directly to shareholders after further talks failed to reach an agreement.". All the Genentech board can do now is recommend shareholders shun the deal.
Genentech shareholders should embrace the new offer. DNA shares trade at $84.90. As the financial crisis worsens, the Roche bid may drop further.Earnings at DNA could also flame out going into the new year. Even biotech will not be immune from a deep recession.
Is it tough luck that the price dropped? Yes. But,, with no other bidders, it is the best deal in town
Douglas A. McIntyre is an editor at 24/7 Wall St.
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