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Roche faces Genentech lawsuit

A Genentech shareholder has filed a lawsuit over the proposed $43.7bn purchase offer from majority stakeholder Roche Holdings, claiming that the bid is inadequate
A Genentech shareholder has filed a lawsuit over the proposed $43.7bn purchase offer from majority stakeholder Roche Holdings, claiming that the bid is inadequate. 

The lawsuit, filed in Delaware Chancery Court, aims to block Roche's bid for all outstanding shares from moving forward under its current terms. According to Steve Toll from law firm Cohen Milstein & Toll, the plaintiff believes that the $89 per share cash offer is unfair and 'short changes Genentech shareholders'.

Genentech and Roche are named as defendants, as is Genentech chief executive Arthur Levinson and others. The lawsuit seeks class-action status on behalf of other Genentech shareholders and accuses the defendants of breaches of fiduciary duties to investors in the biotech firm.

The plaintiff has also contended that Genentech's board of directors will be prevented from independently negotiating a fair deal due to the control structure Roche holds over the company. In addition, the suit states that under agreements between Roche and Genentech, directors at the Swiss company have to give prior approval of any deal involving the sale of all or major segments of Genentech's business which, in effect, 'prevents any other potential bidder from making a bid for the company'.

Roche has said that the lawsuit is 'without merit'. 

24th July 2008

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