Target: Genentech, Inc (DNA)

Buyer: Roche Holding AG

Footing: Unfriendly, nothing agreed upon yet.

The company flexed its financial muscles with the Genentech bid in July, holding firm to its $89 per share offer for the 44 percent it does not already own, even though it was rejected as undervaluing the U.S. biotech company. - Reuters via NYT

Deal price: $89/sh

Current price of DNA: $84.04

Conclusion:

The arbitrage spread looks good. Add to that the fact that DNA rebuffed the July offer as undervalued, I think the offer price could go higher. When it was originally rejected the price of DNA went up to $99/sh. Even though the footing is still unfriendly, Roche is affirming is commitment to buy the remaining shares:

“I would like to reaffirm that we remain committed to the deal and we aim for a negotiated settlement,” Roche Chief Executive Severin Schwan, from Reuters via Forbes

I have my status as WATCH, but it is close to a BUY (Ed. note 11/18/2008: I have since changed my status on this one to a BUY). If this deal goes, I think it might be $100/sh. Here’s a snippet from back Aug 2008 in NYT:

Some analysts say $105 a share would be fair, though Geoffrey Meacham of JPMorgan said Wednesday that Roche might need to pay at least $110.

Sources:

Reuters article via NYT article

Same Reuters article via Forbes.com

NYT article about the first offer that was rejected