A Genentech Shareholder has filed a Lawsuit against Roche over the Takeover Attempt
New Shareholders Lawsuit
Only just 48 hours after the Swiss pharmacy corporation Roche (SWX: ROG.VX RO.S OTCQX RHHBY) announced its plan to acquire all outstanding shares of Genentech (NYSE:DNA), which they do not own already, a Southern California reputable law firm, which is specialized in security law, has filed a lawsuit for a shareholder against Swiss drugmaker Roche over its takeover attempt. The lawsuit was filed today, July 23rd, 2008 in Superior Court of the State of California in the County of San Mateo. The complaint accuses that the company’s Board of Directors, Roche Holdings, Inc. and Roche Holding Ltd. breached their fiduciary duty related to the offer by the world-leading health-care company Roche to acquire all the outstanding stock of Genentech not already owned by Roche for $89 per share in cash. According to the lawsuit the actions are substantially unfair to Genentech and its public shareholders and have caused and will contribute to cause significant damage to the company and its shareholders.
If you hold Genentech, Inc (NYSE:DNA) stock, please contact the Shareholders Foundation, Inc immediately!
Shareholders Foundation, Inc.
3111 Camino del Rio North
– Suite 423 –
San Diego, CA 92108
Fax: +1-(858)-605-5739(Facsimile)
Genentech was founded in 1976 and is a leading biotechnology company and is widely credited with founding the biotechnology industry. The company employs over 10,000 individuals and is headquarter in South San Francisco, California.
According to the lawsuit the Roche/Genentech Affiliation Agreement from 1999 allegedly states that if Genentech’s shareholders vote against a merger of the two companies, then Roche can acquire Genentech anyway, with the sole issue being the price. The Affiliation Agreement provides that, under such circumstances, a special committee of Genentech independent directors would choose two investment bankers who would determine the price to be received by Genentech shareholders. The lawsuit alleges that a provision should not be enforceable because it contravenes the general principle that shareholders must be given the right to determine whether to approve a merger. Giving them a vote – but then allowing the company to be sold even if the shareholders vote “no,” violates corporate law according to the lawyers. In addition the lawsuit raises the allegation that if the deal goes through the supposedly independent directors will make millions and that it will be almost impossible to ensure that the directors will be independent.
Roche is a majority and controlling shareholder of Genentech. It owns approximately 56% of Genentech’s common stock. According to the lawsuit Roche is attempting to use its status as a majority shareholder to acquire all the Genentech common stock it does not already own for less than fair value. Roche’s offer significantly undervalues Genentech’s tremendous pipeline of potential blockbuster drugs, so the complaint. In addition the lawsuits alleges that the individual defendants are breaching their fiduciary duties to the Company and its shareholders by allowing Roche to use its controlling shareholders status to acquire Genentech on unfair terms. The premium that Roche is offering represents just a 8.3% premium, while 21% is an average premium in similar squeeze-out deals, according to the lawsuit.
Many shareholder have contacted us and raised their concern about the offer. One shareholder said: “the Roche’s offer is an an insult to Genentech and its stock holders” . Other Genentech shareholder think the same.
The complaint says that Roche is pursuing an unlawful plan to acquire Genentech for an unfair price and the Genentech’s Board of Directors and Roche violated law by breaching their fiduciary duties of loyalty, due care, independence, god faith, and fair dealing. The lawsuit alleges Roche stands to profit significantly from the proposed acquisition at the expense of Genentech’s public stockholders. According to the lawsuit Roche would have received an additional $804 million in profit had it owned all of Genentech. But without it it has to report an earnings decline in the first half.
If you hold Genentech, Inc (NYSE:DNA) stock, please contact the Shareholders Foundation, Inc immediately!
Shareholders Foundation, Inc.
Trevor Allen
3111 Camino Del Rio North - Suite 423 -
92108 San Diego
Tel:+1-(858)-779-1554
Fax:+1-(858)-605-5739 Mail@ShareholdersFoundation.com
