Bloomberg News

Roche Favors Deals Up to $7 Billion Over Buybacks, CFO Says

December 20, 2012

Roche Holding AG (ROG) favors acquisitions of as much as $7 billion over spending cash on share buybacks, Chief Financial Officer Alan Hippe told Bloomberg Industries analysts at a meeting.

The company is looking for innovative technologies valued at $6 billion to $7 billion, including gene sequencing, Bloomberg Industries wrote in a note to clients today, citing Hippe. Roche, based in Basel, Switzerland, also is seeking smaller product deals to complement its existing offerings, the CFO told the analysts.

The acquisition strategy and potential spending range is similar to those of other pharmaceutical companies such as Sanofi and Roche’s cross-town rival Novartis AG, Bloomberg Industries wrote. Roche is the most leveraged large drugmaker, with a net debt-to-assets ratio of 25 percent, according to Bloomberg Industries. The company plans to use cash to pay down debt with a goal of 15 percent leverage, Hippe said.

Illumina Inc. (ILMN:US) gained in Frankfurt trading today after Swiss newspaper L’Agefi said Roche may have agreed to buy the U.S. maker of DNA sequencing equipment for $66 a share, compared with an unsuccessful bid of $51 a share earlier this year. The Swiss newspaper cited information that “appears trustworthy though couldn’t be verified.” Alexander Klauser, a spokesman for Roche, said the company doesn’t comment on “market rumors.”

Martin Voegtli, an analyst at Kepler Capital Markets, said he thinks the reported bid is “highly unlikely.”

To contact the reporter on this story: Kristen Hallam in London at khallam@bloomberg.net

To contact the editor responsible for this story: Kristen Hallam at khallam@bloomberg.net


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