Roche, Genentech reach merger agreement; restructuring of U.S. operations expected

BASEL, Switzerland, and SOUTH SAN FRANCISCO, Calif. — After months of negotiations, Roche has reached a merger agreement to acquire all outstanding shares of Genentech for $95 per share in cash, for a total of approximately $46.8 billion.

The merger is slated to alter the structure of the companies' U.S. operations, a joint press release said.

Genentech's South San Francisco, Calif., location is being made the headquarters of the companies' combined U.S. operations. It will also operate as an independent research and early development center, with Roche's Pharma commercial operations in the U.S. moving from Nutley, N.J., to that location. In addition, Roche's Virology research and development activities are also being relocated from the company's closing Palo Alto, Calif., site to the South San Francisco site.

According to Jennifer Lowney, a spokesperson for Roche, the company expects that there will be a cut in jobs.

"We estimate about 500 jobs will be lost as result of the closure of the Palo Alto facility," she said in an e-mail to Ocular Surgery News.

Roche is acquiring the remaining 44% of Genentech shares that it did not own, based on the condition that a majority of Genentech's public shareholders tender their shares. A special committee of Genentech's board of directors, which had advised against accepting Roche's earlier proposal because it "substantially undervalue(d)" Genentech's market value, has approved the agreement.

"We believe this is a fair offer for Genentech shareholders, and the committee is pleased to come to a successful conclusion of this process," Charles A. Sanders, MD, chairman of the special committee, said in the release.

Reached by telephone for further comment, a spokesperson for Genentech referred to the joint press release.