Dawn Patrol: Roche Takes Flak, Microsoft Loses a Key Player, Google Takes a Run at Wikipedia

Genentech Investors Balk at Roche Deal

A mere 48 hours after announcing their intentions to acquire the rest of Genentech, pharmaceutical kingpin Roche was slapped with an investor class action lawsuit.


According to the press release: Cohen, Milstein, Hausfeld & Toll, P.L.L.C. has filed a lawsuit in the Court of Chancery of the State of Delaware on behalf of Genentech shareholders concerning the proposed buy-out of Genentech by its majority shareholder, Roche Holdings AG.  The complaint alleges violations of breach of fiduciary duty, and aiding and abetting breaches of fiduciary duty with respect to Roche’s proposed buy-out.

On July 21, 2008, Roche announced in a press release that it had offered to purchase the remaining shares of Genentech that it did not already own for $89 per share, for a total price of $43 billion. Roche is Genentech’s majority shareholder, owning more than 50% of the Company.

The complaint alleges that the Proposal is unfair and inadequate and timed to take advantage of general market turmoil as well as a weak U.S. dollar, and is directed at enabling Roche to assume even greater control of Genentech’s businesses. In reaction to the Proposed Buy-Out, analysts have stated publicly that the price offered by Roche is inadequate and they expect that the Company is worth in excess of $100 per share. The complaint further asserts that based upon the control structure that Roche holds over Genentech, Genentech’s Board of Directors will be unable to independently and adequately negotiate or consider a fair deal. Upon completion of the proposed buy-out, Genentech will no longer be publicly traded.


Steven J. Toll, Cohen Milstein managing partner, stated, “It is clear that the proposed buy-out is on unfair terms and shortchanges Genentech’s shareholders.” Partner Lynda J. Grant said, “This is the second time Roche has attempted to purchase Genentech. Roche has a history of exploiting Genentech with repeated purchases and sales of the Company for its own gain.”  Genentech stock initially rose on the announcement of the Roche offer and hovers around the $93 dollar mark. For it’s part, Roche has a history of starting with lower offers but has shown a willingness to raise the offer price, if needed, to close a deal.

Architect of Microsoft’s Yahoo Acquisition Departs for Juniper

After apparently failing to close the deal, the executive who led Microsoft’s bid to buy Yahoo is departing for greener pastures. 

Kevin Johnson has reportedly taken the job as chief executive of Juniper Networks Inc., a Silicon Valley maker of networking hardware.

As president of Microsoft’s platforms and services division, Mr. Johnson, was in charge of both its online efforts and its flagship Windows operating system. With his departure, Microsoft announced a major reorganization of the massive business unit.


Google Offers its Own Version of Wikipedia–with a Twist

Google has announced an Internet encyclopedia called “knol” designed to give people a chance to express – and profit from – their expertise on any topic.

The service, tagged “knol” in reference to a unit of knowledge, launched seven months ago to an invitation-only audience of contributors and readers. Starting today, anyone with a Google login will be able to submit an article to the wiki.  If the contributor chooses, the submission will feature ads; the contributing author will share any revenue generated from the ads.  Google hopes the financial incentive will generate more participation than the mere psychic rewards provided by rival Wikipedia.


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