Case Question of Roche

Assume Genentech has 1,052 million share outstanding :1. Why is roche seeking to acquire 44 % of genetech it

doesn’t own ?2. From roche’s point of view, what are the advantages of

owning 100 % of genetech ? What are the risk ?3. As a majority shareholder of genetech, what

responsibilities does Roche have to the minority shareholder ?

4. As of June 2008, what is the value of the sinergy roche anticipates from merger with genetech ?

5. Assess the value of sinergies per share of genetech ! ( use weighted average cost of capital 9 % )

Assume Genentech has 1,052 million share outstanding :

Based on DCF valuation technique, what range of value is reasonable for genetech as stand alone company in june 2008 ) use wacc 9 % assume genetech has 7 billion usd cash, ( ignore value of sinergy )

Assume Genentech has 1,052 million share outstanding :• Based on DCF valuation technique, what range of value is

reasonable for genetech as stand alone company in june 2008 ) use wacc 9 % assume genetech has 7 billion usd cash, ( ignore value of sinergy )

• What does the analysis of of comparable companies ( exhibit 12,13,14 ) indicate about genetech’s value within the range established in question above ?

• How has the financial crisis affected the genetech’s value ? What change the assumption occured between jun 2008 and january 2009 ?

• How did Genetech Board and management respond to Roche’s offer of 89 per share ?