Friday, Aug 31, 1990

Roche and Genentech to Complete Merger Transaction On or About September 7

Basel, Switzerland and South San Francisco, Calif. -- August 31, 1990 --

Roche Holding Ltd. and Genentech, Inc. jointly announced that they will complete their pending merger transaction on or about September 7, after both companies entered into a consent decree earlier today with the Federal Trade Commission (FTC).

The provisions of the consent decree, formally known as an agreement containing consent order, will require that Genentech divest its interest in a partnership formed to develop a recombinant process to produce ascorbic acid and that Roche divest its technology with respect to human growth hormone releasing factor. The decree also requires Roche to grant non-exclusive licenses under its U.S. patent rights with respect to Roche's CD4.

Genentech stockholders of record on the date that the merger becomes effective will receive, for each two shares they own, $36 in cash and one share of a new redeemable common stock. The redeemable common stock has been approved for listing on the New York Stock Exchange.

During the next five years, Roche has the right to redeem the outstanding 43 million shares, or 40 percent, at escalating prices ranging from $38 per share for the remainder of this year to $60 per share in 1995. Unless redeemed, the remaining shares will be traded on the New York Stock Exchange (NYSE:GNE). Roche has a right to purchase additional shares on the open market at any time to raise its equity holding to up to 75 percent.

Roche has designated two of its executives, Dr. Armin M. Kessler, Roche chief operating officer and a member of the Roche board of directors and Professor Jurgen Drews, head of corporate research and member of Roche's Executive Committee, to take seats on the Genentech board of directors.

The agreement was first announced on February 2 and was subsequently approved on June 8 by 97 percent of the Genentech stockholders who voted on the transaction. The companies entered into the consent decree in order to resolve concerns over competition that the FTC said it had regarding the transaction. As required by law, the terms of the consent decree will appear in the U.S. Federal Register and be subject to public comment for 60 days, after which the FTC commissioners will decide whether to make it final. The public comment period does not prevent the companies from completing the transaction, which they plan to do on or about September 7.

One of the provisions of the agreement between the two companies is that either company may withdraw from it if the transaction is not completed by September 1. Roche and Genentech each have agreed not to exercise its termination right prior to September 15, 1990.

With the infusion of approximately $490 million in capital from Roche, Genentech will have a total cash balance of approximately $600 million after merger-related expenses are paid. Total merger-related expenses are estimated to be $170 million, $18.9 million of which was incurred during the first half of 1990.

Genentech is a leading biotechnology company with 1,850 employees and headquarters in South San Francisco, California. Genentech has six potential products in clinical trials: gamma interferon for chronic granulomatous disease, trauma-related infection and atopic dermatitis; CD4-IgG for AIDS treatment; DNase for cystic fibrosis; relaxin for childbirth; insulin-like growth factor for nutritional support and wound healing; and argatroban for thrombolysis enhancement. Its two marketed products are Activase, t-PA, for heart attack patients and Protropin, a treatment for growth hormone deficient children. Sales of those products last year were $196 million and $123 million, respectively, and total revenues were $400 million.

Roche Holding Ltd. is headquartered in Basel, Switzerland, and is the parent company of a worldwide group of research based healthcare companies who activities cover the whole health spectrum of disease prevention, diagnosis and therapy. In 1989, Roche's sales totaled approximately $6.4 billion, or 9.8 billion Swiss francs (at 1989 year end rates), and its research expenditure reached $921 million, or 1.4 billion Swiss francs (at 1989 year end rates), or 14 percent of sales. Roche fully supports two independent basic research institutes in Nutley, New Jersey and in Basel, Switzerland. Three scientists have been awarded Nobel prices for medicine during the last six years for their work at the Basel Institute. Roche's own research centers are located in Basel, Switzerland; Nutley, New Jersey; Welwyn Garden City, England and Kamkura, Japan.

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