Roche Offers $43.7 Billion for Remaining Stake in Genentech

Roche’s U.S. headquarters would be relocated from Nutley, N.J., to South San Francisco, Calif., if its $43.7 billion offer to make Genentech a wholly owned subsidiary is accepted.

The company owns a 55.9 percent stake in Genentech and could have to pay more than its initial offer as the California company’s stock has increased following news of the tender. If the companies were combined, Roche’s U.S. pharmaceutical operations would have $15 billion in annual sales with 17,500 employees, including a sales force of 3,000. Roche said it would maintain the combined firm’s sales force.

The company would consolidate Genentech’s manufacturing and late-stage clinical development operations while Genentech would retain its independence for research and early-stage clinical testing.

Roche’s virology research operations in Palo Alto, Calif., would be relocated to South San Francisco. Its manufacturing operations in Nutley would be closed, but its oncology and inflammation research, as well as metabolism business functions, would continue. Support functions, such as informatics and finance, would be consolidated.

“With Genentech’s site in South San Francisco and Roche’s New Jersey-based campus, the U.S. will be home to the biggest research and development centers within the Roche Group,” Roche said.

The move to acquire the remaining interest in Genentech comes as investors wait for Phase III clinical data on the use of Avastin (bevacizumab) in the adjuvant colorectal cancer setting. Investment house RBC Capital Markets expects positive data to add significant growth in use of the product.