Roche: Forget mega-mergers, focus on a new round of blockbuster bolt-ons
By John Carroll
Roche CEO Severin Schwan
No, Roche is not going to merge with Novartis. Or at least, it's not on CEO Severin Schwan's to-do list. Instead, Schwan carefully repeated the pharma giant's strategy on buyout deals: $1 billion bolt-ons are in style, with a limited appetite for deals in the $3 billion to $4 billion range.
Mega-mergers, which earned a bad reputation after seeing others try and fail, are not on the table, he declared. And that evidently extends to fellow Basel resident Novartis ($NVS).
Over the last few weeks Roche ($RHHBY) has been a frequent visitor in the rumor column. The business wires hummed with chatter from their sources about Roche raising funds to acquire the booming rare-disease player Alexion (it never happened, and some top Roche execs like John Reed wound up laughing that one off). Then BioMarin ($BMRN) was reportedly the target, until Roche poured cold water on the market buzz. Novartis came up as a possible merger partner after Novartis board member Pierre Landolt enthused over the possibility publicly.
"When it comes to acquisitions you know we are not into mega mergers," Severin Schwan told analysts today, according to Reuters. "We are firmly committed to bolt-on acquisitions where we build our existing core franchises in pharma and in diagnostics and that can be product deals and technology deals."
Mega-mergers such as the one between Merck ($MRK) and Schering-Plough or Pfizer ($PFE) and Wyeth left a bad smell with investors, who saw a considerable level of wreckage as two big research operations were crushed together as little in the way of major new products emerged. Roche's buyout of Genentech, however, worked like a charm, in part because the pharma parent left the innovators in place to do their work. It was Roche's pRED unit that had to restructure, not gRED.
With CFO gone, BOD member Skaletsky resigning, Japan/Canada approved and European approval on the way, stage is now set for an acquisition by Roche. Time to strike would be before actual EU approval occurs and is reflected in PPS
I've watched this sleazy company for past 4 years. Don't trust this management team whatsoever. We just saw them do a totally dilutive financing that slammed anyone who has bought in the past year. They just released their Def14A. This management team gives themselves stock awards everytime price drops. We should now see this recover. Their methods are clear. I am now back in and will ride it to the next press release announcing something to drive PPS up.