Roche Holding AG finally has a deal to acquire the portion of Genentech Inc it does not already own, but the Swiss pharmaceutical group still has work to do in securing the biotechnology company's top talent.
Genentech's board on Thursday agreed to a price of $95 a share, or $46.8 billion, for the 44 percent of the company not already owned by Roche.
Since the Swiss company launched its takeover bid last July, shareholders and analysts have questioned whether Genentech's prolific scientists and respected top managers would view the takeover as an opportunity to leave.
I have a strong conviction that most if not all senior management will stay on, said Roche Chairman Franz Humer.
Roche plans to keep Genentech's research and early clinical development operations separate from its own, but will combine later-stage development as well as back-office functions.
I think that a lot of people will leave, said Bill Greene, managing director at venture capital firm MPM Capital and a former Genentech employee. It will be hard for Roche to assume that the next 30 years at Genentech will be like the past 30 years.
Genentech, the maker of top-selling cancer drugs including Avastin, Herceptin, and Rituxan, is one of the most successful biotechnology companies of all time and has acted as something of a proving ground for industry talent.
Genentech Chief Executive Arthur Levinson, in an note to employees on Thursday, said no discussions about management of the combined company have been held due to legal restrictions.
Assuming the transaction is completed, we expect to enter into a discussion with Roche on these matters, the CEO said. Roche has repeatedly expressed its commitment to nurturing Genentech's innovation and science-driven culture and to retaining its talent.
Genentech said a retention and severance program put into place last August has not been altered. That plan, which includes cash bonuses, enhanced severance payments and acceleration of stock options, will expire at the end of June.
Anyone who has been at Genentech for five years is doing pretty well, Greene said.
Levinson said Genentech, which had pointed to $112 a share as an acceptable price for a Roche deal, accepted $95 a share because, since late 2008, there has been deterioration in the global financial markets.
Greene said there is no question that venture capital firms have become more cautious and taking more time to evaluate opportunities, but without a doubt there is money -- the best ideas will get funded.
He also expects top Genentech executives like Levinson and Susan Desmond-Hellmann, head of product development, to leave the company and seek other challenges.
Other acquisitions of biotech companies show that it is not always easy for big drugmakers to retain top managers.
David Mott left AstraZeneca Plc's (AZN.L: Quote, Profile, Research, Stock Buzz) MedImmune unit last summer, one year after selling his biotech business to the Anglo-Swedish drugmaker for $15.6 billion.
Mott agreed to stay on after the takeover but he was made a rich man in that deal, since he was entitled to more than $145 million, mostly from the vesting of stock options.
AstraZeneca had offered bonuses to MedImmune staff if they stayed on for a minimum of a year.