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February 9, 2009
How Long Is Roche Prepared to Wait?
So, here’s a question for you: just how long is Roche going to keep their offer open for Genentech? They left their friendly-in-retrospect offer on the table for quite a while, until it was clear that nothing was going to happen. So how long are they prepared to wait? They say that there's no set date, which is a bit odd.
These tender offers generally have some sort of deadline on them, to spur shareholders into action. People have to sit down and think about it: well, is this a fair deal or not? Should I take the offer, turn it down, hold out for a better price as the deadline gets closer? And there’s also the moving-target problem. Stock prices are nothing if not fluid (“The market, sir, will fluctuate!” as J. P. Morgan put it), and that $86.50 price may well look a bit silly (in either direction) after it’s hung out there on the clothesline for a few weeks.
And the longer things go, the more expensive a deal could be. As the Wall Street Journal points out, Roche could end up issuing bonds to pay for a deal that it hasn't even done yet. What happened to those careful, cautious Swiss?
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