Delaware Chancery Court
In 2009, when Swiss healthcare company Roche offered to buy out biotech leader Genentech, Inc. for $43.7 billion, or $89 per share, some minority shareholders of the San Francisco-based company objected to the proffered amount. Although a 1999 affiliation agreement between the two companies permitted such a purchase by Roche as majority shareholder—even in the face of minority shareholder opposition—G&E filed a derivative claim on behalf of institutional investors opposed to the buyout, contending that the 1999 affiliation agreement was invalid as a matter of Delaware law. Without the contractual limitations of the affiliation agreement, Genentech’s Board was able to extract a significantly higher price that Roche had originally offered and which otherwise would have been permitted under the 1999 affiliation agreement. With the pressure of the pending litigation, therefore, G&E was able to reach a settlement that provided for Roche to pay $95 per share, representing an increase of approximately $3 billion for minority shareholders.