TD Mergers & Acquisitions Competition 2015 We created a presentation on the potential bid structure and analysis of the transaction based on HBS case 9-210-040 "Roche's Acquisition of Genentech". Team members: Catherine Qian Jenny Li Terence Leung Yu Cao

1. Acquisition of Genentech
Presentation to board of directors
March 13th, 2015

2. 2
Team member
Catherine QianYu Cao
Jenny Li Terence Leung
• Rotman Commerce, University
of Toronto Class of 2015
• Incoming Investment Banking
Analyst at BMO Capital Markets
• Work Experience:
• Deloitte
• Rotman Commerce, University
of Toronto Class of 2015
• Work Experience:
• Citi Financial Institutions
Group
• Returning to Citi full-time
• Rotman Commerce, University of
Toronto Class of 2015
• Work Experience:
• CIBC World Markets DCM
Structured Finance
• Returning full-time
• Rotman Commerce, University
of Toronto Class of 2015
• Past Work Experience:
• Investment Banking Analyst
at National Bank Financial
• Summer Analyst at Aberdeen
Asset Management

3. 3
Executive summary
Proceed with Transaction Proceed with the transaction given projections of 9.5% EPS accretion
by 2011 and significant strategic implications
Recommendation for the Board
Special Committee Counter Offer
Tender Price
Timing Considerations
Transaction Financing
Deal Structure
Rejection of previous bid and $112 purchase price
recommendation to be unreasonable
Tender offer of $96.70 per share with a non-transferable
contingent value right for 0.134 non-voting shares per share
acquired, with expiration in a year
Transaction should close prior to April 2009, equity kicker
addresses potential upside from Avastin Phase III trial result
Access the public bond markets to finance tender offer, soft
sound interest from institutional lenders prior to road show
Tender offer is recommended to close transaction in a timely
manner at competitive price to maximize shareholder value

4. 4
Illustrative transaction
At Market At Bid
Roche Genentech Pro-Forma
Share Price / Offer Price
Implied Exchange Ratio
Spot Premium
Fully-diluted Shares Outstanding
Market Capitalization / Value of Offer
Cash & ST Investments
Total Debt
Enterprise Value
2009E EPS
2010E EPS
2011E EPS
Accretion / Dilution (2009E)
Accretion / Dilution (2010E)
Accretion / Dilution (2011E)
EV/ Revenue (2009E)
EV/ EBITDA (2009E)
P/E (2009E)
Pro Forma Ownership
$189.7
-
-
$84.09
-
-
$96.7
-
15%
$177.07
Hostile tender offer for Genentech Minority Shares at $96.70, a 15% premium over current share price
Tender offer financed through $47.8 billion in public market debt
860
$163,175
1053
$88,546
1,053
$101,829
$13,624
$1,919
$151,470
All in $USD millions, except per share items
$13,066
$2,829
$78,309
$13,066
$2,829
$91,592
$11.89
$13.78
$14.00
$3.56
$3.77
$3.99
$11.88
$14.44
$15.33
(0.1%)
4.7%
9.5%
100% Roche
Shareholders
5.5x
12.4x
23.6x
3.6x
13.1x
16.0x
13.1x
13.1x
14.9x
6.4x
14.5x
27.2x
1,053
$186,454
$26,690
$49,755
$209,519

5. 5
Strategic considerations and risks
Strategic Benefits
Risks
Free Cash Flow
Genentech’s significant increase in 2007 FCF indicated strong capacity to help repay financing of
merger transaction
Product
Licensing -2015
Renegotiation of licensing agreement for commercialization of Genentech’s portfolio outside of U.S. in
2015 means that the exclusive right for production of Genentech's product could be sold to highest
bidder.
Overlap and
Cannibalization
Genentech was transitioning from a biotechnology firm to biopharmaceutical company. Roche’s new
product launch and Genentech’s international expansion produced increasing areas of overlap
R&D
Information flow between researchers can facilitate product development without restriction due to
intellectual property concerns
Retention and
Culture
Fiercely independent culture and which focused on science and patients drove employees to achieve
results, merger with Roche might result in key personnel loss
R&D Process
Integration
Promised autonomy of Genentech’s R&D limits synergies
Growth
Projections
June LRP and November NFM both assumed growth rates near industry average for Biotech;
Genentech is transitioning into Biopharmaceutical which has lower growth
1
2
3
4
1
2
3
Dependence on
few products
Sales of Genetech’s top 3 product in Roche’s portfolio consists of 35% of Roche’s total sales, while
next 3 best selling product consists of 4%. Projections heavily dependent on Rituxan, Avastin, and
Herceptin
4

6. 6
Investor reaction and Activity
Share Movement Following Bid Announcement and
Subsequent Special Committee Decision
Analyst Consensus Price Target of $84.99
Roche’s stock fell moderately on day of previous Genentech offer but recovered shortly thereafter, indicating
shareholder support for the deal. Genentech’s stock traded above $89 offer price following announcement,
indicating market expectation of an increase in offer.
Shareholder
Considerations
Special Committee rejection of offer and subsequent dip in Roche share
price indicate shareholder fear of overpaying for Genentech, implying
support for deal will be difficult above the $90-$100 price range

7. 7
Special committee decisions
Price of $112 is Not Supported
Projection Revisions: LRP vs. NFM LRP vs. NFM Growth Projections
We believe the Special Committee`s decision and suggested price to be unreasonable given current market
valuations and lack of quantitative support for key growth projection revisions between LRP and NFM
 No quantitative support for revision to $112
 Recessionary market environment does not
support $112 valuation, large premium over
trading comps of industry peers
 M&A premium based on comparable
transactions applied to Genentech valuation
ranges from $70.04 - $98.47
1. Tax rate: 5% Downward revision of tax rate
due to restructuring is aggressive
2. Equity compensation: No support for
changing from expensing to capitalizing,
capitalization of equity compensation
increases Genentech's key multiples and
valuation metrics (EBITDA, Net Income) with
no change in revenue generating capability
3. Projection period: No support for 6 year
increase in projection period
LRP
NFM 6.90%
4.97%
CAGR Heavily Impacted by Increase in Projection Period
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
LRP 7.0% 1.000$ 1.070$ 1.145$ 1.225$ 1.311$ 1.403$ 1.501$ 1.606$ 1.718$ 1.838$
NFM 6.9% 1.000$ 1.069$ 1.143$ 1.222$ 1.306$ 1.396$ 1.492$ 1.595$ 1.705$ 1.823$
2019 2020 2021 2022 2023 2024
LRP 2.0% 1.875$ 1.913$ 1.951$ 1.990$ 2.030$ 2.070$
NFM 6.9% 1.949$ 2.083$ 2.227$ 2.381$ 2.545$ 2.721$
LRP Projection Period
NFM Extended Projection Period
*return per invested dollar based on Greenhill and industry average 2% LT growth past projection period

8. 8
Valuation Overview
Football Field
Enterprise value of Genentech determined to be US$91.6 billion
Tender offer price determined to be US$96.70
Valuation Methodology
Discounted Cash Flow
Analysis
Given the recent volatile market conditions, we recommend a transaction share price of US$96.70 based on a
15% premium over Genentech`s current share price.
Public Comparable Analysis
Minority Squeeze-Out
Premium Analysis
Contingent value right to
non-voting shares
$50.00 $60.00 $70.00 $80.00 $90.00 $100.00 $110.00 $120.00
DCF Perp
DCF Multiple
Comparable
M&A Premium
Offer Price
$96.70
$98.50$71.0
$57.60 $69.07
$97.10 $101
$82.80 $94.70
Combined Entity Analysis

9. 9
Discounted cash flow Analysis
Perpetuity Method
Discounted Cash Flow Analysis
EBITDA Terminal
Multiple
• 12.0x EBITDA
multiple
• TV Growth Rate
of 3.6%
Perpetual Growth
• 2% perpetual
growth rate
assumed
• WACC of 8.9%
WACC Calculation
Target Capital Structure
Debt to total capitalization 30.0%
Equity to total capitalization 70.0%
Cost of Debt
Cost of Debt 5.0%
Tax rate 35.0%
After-tax cost of debt 3.3%
Cost of Equity
Risk -free rate 3.5%
Market risk premium 7.1%
Levered beta 1.04
Size premium 0.0%
Industry premium 0.0%
Cost of equity 10.8%
WACC 8.6%
Multiple Method
Contract Expiring in 2015
• Included fair value of $5 Billion based
on projected sales figures
DCF Value - Multiple Method
WACC 8.6%
Terminal EBITDA Multiple 12.0 x
(Millions)
PV of 5 yr Cash Flows $15,576
PV of Terminal Year $79,214
Opt-in right $5,000
Enterprise Value $99,790
Less Net Debt (12/31/09) (6,716.0)
Equity Value $106,506
Shares O/S (MM) - (12/31/09) 1,053.0
Equity Value per Share $101.1
Stock Price - January 29, 2009 $84.09
Implied TV Growth Rate 3.6%
Taking a blended approach by considering projected perpetual growth rate and market multiple, arrive at an
intrinsic value of TEV between $85 - $105bn.
Discounted Cash Flow analysis yields a valuation range of $87 - $106 per share

10. 10
Public comparable analysis
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
10.0x
AstraZeneca
EliLilly
Cephalon
Novartis
GSK
Pharmaceutical
Merck
Wyeth
Roche
Amgen
Genzyme
Biogen
Genentech(Current)
Biotech
Genentech(Roche
InitialProposal)
Gilead
2008EV/Revenue
Biotech Pharmaceutical Average
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
AstraZeneca
Novartis
Wyeth
Roche
Pharmaceutical
EliLilly
Merck
GSK
Cephalon
Amgen
Genzyme
Biogen
Biotech
Genentech(Current)
Genentech(Roche
InitialProposal)
Gilead
Celgene
2009EV/Revenue
Biotech Pharmaceutical Average
3.4x 6.7x
5.6x
2.1x
Analysis of fundamental valuations across Biotech and Pharmaceutical industries show weaker multiples in 2009
vs 2008, reflecting impact of financial crisis on equity markets. Market trend indicates lower valuation for
Genentech is reasonable given current investor sentiment.

11. 11
Public comparable analysis
Our Valuations Weight
GSK 16.7%
Novartis 16.7%
Astra Zeneca 16.7%
Merck 16.7%
Wyeth 16.7%
Roche 16.7%
Eli Lilly 0.0%
Our Valuations Weight Composite
Amgen 35.0%
Gilead 50.0%
Celgene 10.0%
Genzyme 5.0%
Biogen 0.0%
Cephalon 0.0%
Biotech Valuations
2008 EV/Revenue $103,319
2009 EV/Revenue $88,089
2008 EV/EBITDA $78,569
2009 EV/EBITDA $82,234
2008 P/E $78.64
2009 P/E $74.09
Pharmaceutical Valuations
2008 EV/Revenue $45,517
2009 EV/Revenue $27,595
2008 EV/EBITDA $109,421
2009 EV/EBITDA $80,607
2008 P/E $58.67
2009 P/E $39.76
BioTech Pharmaceutical
Valuation Summary
Employed a Sum of Parts approach to accurately reflect different market multiples for BioTech and
Pharmaceutical firms when valuing Genentech. Current trend of industry convergence into BioPharma expected to
impact Genentech’s future growth and valuation.

12. New Offer Price
1 Day 1 Week 1 Month 52W High
All-Time
High
98.08$ 96.86$ 97.77$ 98.47$ 71.04$
12
Squeeze-Out Premium analysis
Weighting Criteria
% Sought
Similar percent of minority interest sought to
buy out due to impacts on shareholder
behaviour
Deal Value
Deals of similar value to account for
differences in operations and market liquidity
Timing
Transactions that took place more recently
better reflects current market environment and
sentiment
Industry
Post GFC, the financial industry became
extremely volatile in a way that does not reflect
Genentech’s revenues nor valuations
Valuation Methodology
Closed By 7/18/2008
 Weighted average approach used to account for valuation
differences between deals prior to and after the financial
crisis
Premiums Applied
Closed After 7/18/2008
 General Transactions: Comprehensive overview of
squeeze out landscape and general premiums applied
 Core Comparable Transactions: Filtered transactions to
get more relevant and reflective comparison premiums
 Recency VS Industry: Although these premiums are more
recent, the finance industry have potentially skewed
valuations due to the GFC
Analysis yields a valuation range of $71.04 - $98.47 per share. Employed a weighted average approach to
accurately reflect different premiums applied given pre-crisis and post-crisis equity market conditions.
Timing Historical Offer Premium Weighting
1 Day 1 Week 1 Month 52W High
All-Time
High
Pre Crisis 16.8% 18.2% 18.2% 0.6% (26.0%) 30%
Pre Crisis (Core) 18.4% 19.2% 19.0% 0.5% (30.7%) 70%
Post Crisis 17.1% 18.2% 19.9% (1.4%) (26.6%) 45%
55%

13. 13
Summary of tender offer
Summary Terms
Non-Transferable Contingent Value Right
Transaction Value
 Aggregate consideration offered of $44,800 million
 Implied equity value of $101,931 million
 Implied firm value of $91, 694 million
Description
 Offer by Roche to acquire the 463 million shares it
does not currently own
 Represents 44% of total shares outstanding of
Genentech
Consideration
 $96.70 per share in cash, 15% premium to current
share price
 Financing secured with debt
 Shareholders will be entitled to a contingent 0.06 non-voting shares
per Genentech share tendered upon conclusive result of phase III
testing that Avastin has significant application to treatment of additional
forms of cancer
 Expiration of offer : Earlier of one year or defined period of time after
confirmation of result
 Assuming zero accretion in 2010, Roche is effectively able to issue
0.06 non-voting shares per outstanding share of Genentech without
effecting Roche family’s 50.01% majority ownership
 Preserves cash payments now and becomes attractive to Genentech
shareholders
 Frees up cash as company do not need to set an amount equal to the
contingent obligation for 1 year
 Non-voting shares do not dilute the current ownership
Recommend a tender offer of $96.70 per share financed with debt. Additional non-transferable contingent value
right added to account for upcoming Avastin test results.

14. 14
Tender offer considerations
Need to retain employees and R&D culture
to achieve expected synergies
Post – Acquisition Integration
Timing of Deal Resolution
Employee
Perception
Difference in
Culture
• Hostile tender offer negatively impacts employee perception of Roche
• Low offer price encourage employees to leave due to equity based compensation
• Employee and IP based business, skills and knowledge retention highly important to synergies
• Clash due to differences in firm culture, two different industries
• Could lead to less productivity or inability to retain top talent
Affects morale and ability to retain talent,
Avastin results could push up price
Slower
Process
• Less support and cooperation from management will slow down due diligence and offer process
• Battle can last for months or over a year, requires significant management time and attention
More Steps
• Hostile tender offer more complex in nature than a friendly deal
• 2 step process to close deal, receive majority tender (90%) and squeeze out remaining shareholders
Operating
Independence
• Historically operated independently and view that as important part of firm identity
• Could impact retention of top talent or ability to attract new employees
• Need to balance with ability to achieve synergies by combining certain operations
Ability to manage post-acquisition integration and close deal in timely manner are important considerations should
Roche execute a hostile tender offer.
Cross-Atlantic mobility, independent span of control mandate and 10% premium over compensation benchmark
Soft sound with institutional shareholders prior to announcement to speed up tender process and likelihood of success

15. 15
Minority Shareholder Analysis
Minority Shareholders - Genentech Under Pressure to Sell Minority Interest
 Largest % composite of minority shareholders
 Financial Crisis in 2008
 Massive Reduction in Net Asset Value of Funds (AUM)
 Revenue stream comes from management fees
 Main objective is to restrict loss and beat benchmark
 Restrict fund outflows
 Retain liquidity to ensure smooth transaction of
redemptions
 Eg. BlackRock, Fidelity, Vanguard
Tender offer price of $96.70 representing a 15% premium over current share price will be an attractive
proposition to funds looking to beat industry benchmark and free up assets for net redemptions.
We anticipate success in attracting over 90% of controlling interest to begins squeeze out transaction
Targeting institutional asset management funds will be key to achieving tender offer success. High likelihood they
will tender shares given need to maintain fund liquidity.
Institutional Asset Management Funds
Exchange Traded Funds
Genentech Employees
Genentech Management Team
Hedge Funds
Retail Investors

16. Transaction Financing
Preferred Equity
Methods Considerations
Institutional
Investor
Syndicated
Bridge Loan
 Benefits: Lower financial risk and more economical than equity issuance
 Risks: Limited funding, more complex structure
Equity
 Benefits: Lower financial risk and fixed obligations during period of recession
 Risks: Depressed stock prices – Down 20% since Jan 2008-09, new issuance will dilute
Hoffmann and Oeri families ownership of Roche (50.1%) to less than majority
Public Debt  Benefits: Largest market, more liquidity, lower yield
 Risks: Higher financial risk, especially with cross-default covenants during financial crisis,
requirement of 2 public high quality credit ratings, credit crunch, lengthy execution
144A - Private
Placement
 Benefits: Fast execution, sophisticated investors, flexible financing arrangements
 Risks: Higher financial risk, smaller market, more stringent covenants
 Benefits: Reduces transactional costs, more flexible deal structure
 Risks: Time consuming, difficult to find multiple investors who can fund the deal
 Benefits: Relationship with bank could allow low cost and more flexibility in working with Roche
on their needs due to considerations of ancillary revenue driven from other areas (M&A etc.)
 Risks: Lack of liquidity on bank’s balance sheet, fear of cross default made on balance sheet
lending hard to obtain
US, Europe Debt
Markets
 Benefits: Increase chance of raising required amount of debt during the financial crisis
 Risks: Complicated process and currency risks along with hedging costs

17. 17
Transaction Financing
 Estimated Rating: A1 – A2
 Estimated Spread: ~7%
 Benefits: Larger market (issuance size), lower
spread, less restrictive covenants, procedural
 Risks: 2 ratings needed, prolonged discussion
with rating agency, additional steps such as pre-
rating (given financial crisis), banks not willing
to underwrite given GFC
Source of Financing Transaction Details
Public
144A Private
 Benefits: Faster issuance to meet cash flow needs of transaction, more flexibility on structure of
deal, less reliance on bond rating with more educated investors
 Risks: Smaller market available, higher spread, more restrictive covenants, less liquidity
 Opportunities: Access non-traditional fixed income investors given market condition, greater
geographic flexibility to spread risk and increase interest
Interest Coverage Ratio Bond Rating Corporate Yield
8.5x 10.0x Aaa 5.04%
6.5x 8.5x Aa2 5.66%
5.5x 6.5x A1 6.28%
4.3x 5.5x A2 6.90%
3.0x 4.2x A3 7.52%
2.5x 3.0x Baa2 8.14%
Bond Rating Projection
 Current outstanding bonds rated at A1
 Competitors rated between A1 – Aa2
 New debt issued will raise interest coverage ratios and impact firm cash flows
Recommend accessing public debt market for deal financing given lower yield. Likely to be executed given
projected bond rating and access to international bond market.

18. Debt & Interest Schedules
Historical Projections
Prior Year 2 Prior Year 1 Last Year Year 1 Year 2 Year 3 Year 4 Year 5
Beginning Bank Debt: 9,211$ 9,170$ 8,846$ 8,304$ 7,527$
Mandatory Repayment: (1,842) (1,842) (1,842) (1,842) (1,842)
Optional Repayment: 1,801 1,518 1,301 1,065 809
Ending Bank Debt: 9,170 8,846 8,304 7,527 6,494
Beginning High-Yield Debt: 36,845$ 36,476$ 36,108$ 35,739$ 35,371$
Mandatory Repayment: (368) (368) (368) (368) (368)
Optional Repayment: - - - - -
Ending High-Yield Debt: 36,476 36,108 35,739 35,371 35,003
Interest Paid on New Debt: (4,309)$ (4,260)$ (4,193)$ (4,110)$ (4,009)$
Debt/EBITDA 8.0 x 7.5 x 7.0 x 6.5 x 6.0 x
Interest Coverage 1.3 x 1.4 x 1.4 x 1.6 x 1.7 x
Investor Returns
Historical Projections
Prior Year 2 Prior Year 1 Last Year Year 1 Year 2 Year 3 Year 4 Year 5
EBITDA: 5,413$ 6,899$
EBITDA Multiple: 16.9 x 17.0 x
Enterprise Value: 91,592 117,277
Investor Equity: (58,617) - - - - 85,412
Cash-on-Cash Return (Returns Multiple): 1.5 x
IRR: 7.8%
18
LBO Model
We looked at Leveraged-Buyout as a potential way of financing this transaction. However, the analysis shows that
without revenue synergies we are not likely to reach a satisfactory return in the 20%-25% range.

19. 19
Roche ability to pay
Roche ability to pay will initially be influenced by its capital structure. A leverage multiple of 3.8x was assumed to
estimate required synergies. At 15% premium, Roche needs to achieve synergies of $532 million.
Illustrative Price 88.3 92.5 96.7 100.9 105.1 109.3
Premium (%) 5% 10.0% 15.0% 20.0% 25.0% 30.0%
Total consideration to Genentech Shareholders 92,974.1 97,401.4 101,828.8 106,256.1 110,683.5 115,110.8
Add assumed Genentech loan 2,829.0 2,829.0 2,829.0 2,829.0 2,829.0 2,829.0
Add transaction fees 101.8 101.8 101.8 101.8 101.8 101.8
Total consideration 95,904.9 100,332.3 104,759.6 109,187.0 113,614.3 118,041.6
Total consideration paid to minority shareholders 42,198.2 44,146.2 46,094.2 48,042.3 49,990.3 51,938.3
Approximate Roche Leverage Multiple 3.8 x 3.8 x 3.8 x 3.8 x 3.8 x 3.8 x
Roche EBITDA (2009E) 11,597.5 11,597.5 11,597.5 11,597.5 11,597.5 11,597.5
Target new debt $44,070.3 $44,070.3 $44,070.3 $44,070.3 $44,070.3 $44,070.3
Excess leverage above target -1,872.1 75.9 2,023.9 3,971.9 5,920.0 7,868.0
Required synergies at 3.8x leverage -492.7 20.0 532.6 1,045.2 1,557.9 2,070.5
Illustrative Case
Implied Acquisition Multiple (2009E Revenue) 5.8 x 6.1 x 6.4 x 6.8 x 7.1 x 7.4 x
Implied Acquisition Multiple (2009E EBITDA post-synergies) 12.8 x 13.5 x 14.2 x 14.8 x 15.5 x 16.2 x

20. 20
Roche ability to pay
Interest coverage ratio in 2009 based on estimated financials is 5.3x. Assuming that Roche will gain access to
Genentech’s cash and FCF, combining with its own FCF for the next five years, the company will generate enough
free cash to repay its total borrowing.
New debt 47,835.5
Interest on debt 7%
Expected interest payments 3,348.5
Roche EBITDA 11,597.5
Genentech EBITDA 6,329.0
Interest coverage 5.35
Cash on hand 26,690.0
FCF Genentech (08 - 13) 19,694.4
FCF Roche (08 - 13) 30,991.4
Resctructing cost 3,500.0
Cash available 80,875.7

21. 21
Illustrative timeline
1. Tender Offer 2. Short Form Merger
Early April 2009:
Genentech acquisition
transaction closes
Feb 14th 2009:
Issue press release announcing
intention to tender for remaining
44% of Genentech shares that
Roche does not own
March 1st 2009:
Roche launch unsolicited tender
offer at $96.70 per share with
expiration in 2 weeks
March 16th 2009:
Extraordinary shareholder
meeting to negotiate merger
plans, integration and
organizational structure
March 14th 2009:
If Roche obtains 90%
voting control, enter into
negotiation to “squeeze
out” remaining 10%
Feb 1st 2009:
Roche enter into talks
with rating agencies to
obtain preliminary rating
Feb 25nd 2009:
Conclusion of road show
and secure financing
amount and structure
Feb 1st 2009:
Soft sound
tender offer with
large institutional
investors
Feb 7th 2009:
Enter into discussions to
secure financing and
book road show
March 14th 2009:
Expiration of tender offer

22. 22
Deal structure analysis
Earn-Out Clause
Asset Purchase
Maintain Status Quo
Friendly Merger
 Description: Additional compensation dependant on reaching certain performance targets
 Risks: Complex structure, higher overall price, longer negotiation period
 Benefits: Bridge valuation gap, incentive-based compensation to retain employees
 Description: Purchase some or all of the assets from the target firm
 Risks: Transfer of IP assets very complicated legally, target firm unwilling to sell
 Benefits: Flexibility to pick and choose assets
 Description: Maintain current partnership structure, renegotiate new agreement after 2015
 Risks: Price of agreement bid up through competition, overlap between firms increase
 Benefits: Less risk, capital to invest in alternative assets, wait for better buy opportunity
 Description: Continue discussions until agreement is reached with special committee
 Risks: Longer timeline to close deal, higher price
 Benefits: Easier to retain top talent, more cooperative management team, better
integration, cheaper
Alternative Transaction Structures
CVR - Cash
 Description: Right to receive predetermined cash amount per share upon conclusive
result of Avastin’s application on other treatments of cancer
 Risks: Contingent obligation requires cash to be tied up, higher transaction cost
 Benefits: Avoid paying for potential of Avastin’s additional revenue generating abilities and
obtain the benefit at a low cost upon confirmation successful Phase III testing
Unlikely to achieve friendly merger given Special Committee’s recommendation. Tender offer is the best
alternative structure to close deal by anticipated timeline and at Roche shareholder acceptable price.

23. 23
Combined Entity Analysis
In our base case, due to the 50.01% family ownership of Roche, we are assuming no equity issuance in this deal.
We are seeking $47.8 billion in debt financing assuming no cash on hand is used. We also assumed to refinance
all of Genentech’s debt.
SOURCES & USES
Sources: Uses:
0.0% 97.1%
0.0% 2.7%
45.6% 0.1%
54.4% 0.1%
0.0% Total Uses $104,860 100.0%
Total Sources $104,860 100.0%
PURCHASE PRICE ALLOCATION
Equity Purchase Price (A) $101,829
Implied New Goodwill $75,559
Tangible Book Value (B) $17,875
Excess Purchase Price (A) - (B) $83,954 Deferred Tax Liability Created $4,521
Implied Gross Asset Write-Up $12,916
Implied Net Asset Write-Up $8,395

24. 24
Combined entity analysis
For pre-amortisation earnings we are seeing this deal as slightly accretive to Roche in the first five years. After
accounting for merger-dependent synergy, we are even seeing a slight dilutive effect on EPS due to the estimated
significant restructuring cost from shutting down plants and employee termination.
Pro-Forma Shares Outstanding 860.0 860.0 860.0 860.0 860.0
Pro-Forma EBITDA (100% Genentech)
Pro-Forma EPS (100% Genentech) $11.88 $14.44 $15.33 $16.93 $18.43
Accretion / Dilution (EBITDA) 0.8% 2.0% 2.3% 2.4% 2.4%
Accretion / Dilution (EPS - independent synergy) 0.3% 1.5% 1.8% 1.8% 1.7%
Accretion / Dilution (EPS - merger-dependent synergy) (0.1%) 4.7% 9.5% 13.3% 15.9%
Additional Pre-tax Synergies to Break-Even $9 ($863) ($1,755) ($2,628) ($3,354)
$ Millions (except EPS) 2009F 2010F 2011F 2012F 2013F
2009 Sensitivity Analysis - Premium vs. Synergies
Purchase Premium
5% 10% 15% 20% 25%
$88 1.9% 0.8%
Synergies $113 2.1% 0.9%
($ MM) $138 2.3% 1.1% (0.1%)
$163 2.4% 1.3% 0.1%
$188 2.6% 1.4% 0.3%
2009 Sensitivity Analysis - Premium vs. Asset Write-Ups
5% 10% 15% 20% 25%
20.0% (2.6%) (4.1%) (5.5%) (7.0%) (8.4%)
25.0% (5.1%) (6.7%) (8.3%) (9.9%)
Asset Write-Ups 30.0% (7.5%) (9.3%)
35.0% (10.0%)
40.0%

25. Post transaction analysis
40
60
80
100
120
140
January1,2008=100
Post-Merger Share Price Analysis
ROCHE HOLDING S&P1500 BIOTECHNOLOGY INDEX GENENTECH
12/31/2010
Post-Merger Target Share
Price based on 14.9x multiple
12/31/2009
Post-Merger Target Price based on 14.9x multiple
$177.07
$215.09
Historical Price Projected Post-Merger
Based on 14.9x multiple given historical trading multiples, we are expecting the share price of Roche post-merger
to reach $177.07 by end of 2009 and $215.09 by 2010 given success of tender offer at recommended price. This
represents a 6.7% discount and 13.4% upside to current share price at $189.74.