Genetech Merger Holdouts Face Dimming Hope (DNA)

The hope for a higher Genentech Inc. (NYSE: DNA) buyout price is getting smaller and smaller.  After the companies agreed to a $95.00 per share merger, this was already assumed as the nearly certain outcome by most.  The company’s objections and fight for more cash have both been resolved and now it appears that the cases for holdout shareholders wanting more are systematically out of the way.

Roche noted that on March 17 and 18, 2009, the plaintiffs in the three related actions pending filed amended complaints adding Roche as a named defendant, updating the factual allegations, and seeking damages and declaratory and injunctive relief.

This was based upon allegations that the special committee’s decisions to enter into the merger agreement and recommend the buyout offer be accepted was a breach of fiduciary duties.  These allegations also noted that Roche aided and abetted the breaches, and noted that SEC filings included false, misleading or omissive disclosures.

Now, today, comes the detail that counsel to the parties to the consolidated action pending, entered into a settlement stipulation to resolve the actions.  The Delaware consolidated action will be dismissed with prejudice on the merits, while the plaintiffs in the California Actions will voluntarily dismiss with prejudice the California Actions, and all defendants will be released from any claims relating to the merger and any disclosure made in connection with the merger.

The settlement is subject to approval but this will not affect the offer price.  Shares closed up 0.5% at $94.25 today, so there is already less than a 1% arbitrage spread left in the merger.   This may not be the last hurdle to the deal closing, but the hopes for any more money coming are looking slim to none.  And “slim” may have left town.

JON C. OGG