A lawsuit has been filed in a court in Delaware, USA by a Genentech shareholder who is claiming that the proposed $43.7 billion buyout by Roche involves an “unfair and inadequate” bid.
The complaint alleges that Roche’s offer has been “timed to take advantage of general market turmoil as well as a weak US dollar, and is directed at enabling Roche to assume even greater control of Genentech’s businesses”. It notes that analysts have stated publicly that the price offered by Roche is inadequate and they expect that the company is worth in excess of $100 per share.
The lawsuit, which seeks class-action status on behalf of other Genentech shareholders, also contains the claim that based upon the control structure that Roche holds over Genentech, the latter’s board of directors “will be unable to independently and adequately negotiate or consider a fair deal”.
Steven Toll, partner of the Cohen Milstein Hausfeld & Toll lawfirm that has filed the suit, stated that “it is clear that the proposed buy-out is on unfair terms and shortchanges Genentech’s shareholders”. Another partner, Lynda Grant, added that “this is the second time Roche has attempted to purchase Genentech. Roche has a history of exploiting Genentech with repeated purchases and sales of the company for its own gain.”
The lawsuit also notes that under agreements between Roche and Genentech, the former’s directors must give prior approval of any deal involving the sale of all or major portions of the US biotechnology giant, thus “effectively preventing any other potential bidder from making a bid for the company”.
Genentech and Roche have made no official response on the lawsuit yet.
