ROCHE HOLDING AG: Funding the Genentech Acquisition Harvard Case Solution & Analysis

ROCHE HOLDING AG: Funding the Genentech Acquisition Case Solution

To acquire Genentech; the company needs $42 billion in cash and sell bonds worth $32 billion. The ongoing turmoil in the overall global financial market might posit risk to the company. Also, another risk is little or no willingness of Genentech in selling its shares at the reduced price. Additionally, the financial market is reluctant to interest rate, the interest rate is reduced by central bank & the massive flight to the quality of international investors moving capital to the US treasuries, and the borrowings are increasing as well as the credit spread expanded to the historic level, thus negatively affecting the Roche’s deal.  Also, the equity market prices had decreased to 45 percent and a large number of investment and commercial banks failed. Hence, this is not the right time to pursue the deal of acquiring the Genentech.

            Appendix A – Ratios

Appendix B – Trend of AA Spread

Appendix C – Trend of BAA Spread 

Appendix D – YTM & Spread

Appendix E – Prevailing Spreads for Comparable Bonds

Appendix F – Trend Between Operating Income and Net Income

Appendix G – Revenue Trend

Appendix H – Bond Coupon Payment and Price

Appendix I – Decision of Acquisition

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