Thursday, July 24, 2008

How to Spend $44 Billion: Suggestions for Roche

We've given you our thoughts on why Roche wants to spend so much money ($43.7 billion to be exact) to buy out Genentech, a company it already controls. Of course, a key part of analyzing the deal is to consider other ways Roche could spend the money. So, herewith, we start a recurring discussion:

How else could Roche spend $44 billion?

A few initial ideas to get your creative juices going...

(1) Buy Bristol-Myers Squibb instead (current market cap=$44 billion). Why not get access to oncology/specialty products you don't already own?

(2) Buy Genzyme and Celgene (combined market cap=$50 billion). Two for the price of one!

(3) Buy majority stakes in Genzyme, Celgene, Biogen Idec, and a dozen small-to-mid-cap biotechs.
If, as we keep insisting, the Genentech relationship was the most successful partnership in the history of the industry, why not repeat it on a grand scale?

(4) Buy Fannie Mae and Freddie Mac.
Roche is a banker, after all, and these two depressed assets are surely a good value. Best of all (believe it or not) Roche could buy them both and still have over $20 billion left to shore up their cash reserves. America is saved!

(5) But a $16 Terrace Level ticket
for dollar dog night at Citizen's Bank Park. Take in the Phillies vs. Marlins in a critical September showdown. Purchase 43,699,999,983 hotdogs. Tip the guy a buck.

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