Chapter 751 Initiating an Acquisition

After determining the target, Xia Yu immediately pulled together a complete acquisition team from the company's elite and began gathering detailed information on the target with full force.

Many of these elites, who had been recruited specifically, had worked for capital management companies or venture capital companies in San Francisco or Silicon Valley and were well informed about the venture capital sector in recent years.

In just five days, detailed information on Genentech was collected and presented to Xia Yu's desk.

Genentech was just the abbreviation; the full name of the company was the American Genetic Engineering Technology Company.

The company was founded on April 7, 1976 and is currently based in San Francisco.

In later years, Genentech could be considered the oldest biotechnology company in the United States, second only to Amgen in terms of size and strength.

However, in later years, Genentech was acquired by the Swiss pharmaceutical group Roche, which acquired 60% of Genentech for 2.1 billion US dollars in 1990.

In 2009, Roche again paid approximately 46.8 billion US dollars to acquire the remaining 40%.

In other words, by 2009, Genentech was valued at over 110 billion US dollars.

Genentech's future is undoubtedly extremely promising, but for now, it is still a young company that was founded just over three years ago and is not yet listed.

The venture capital firms deserve a great deal of credit for the establishment of Genentech and its smooth development to the present day despite the company's losses.

Initially, Genentech was founded by Robert Swanson, a 27-year-old partner at a venture capital firm called Coller Perkins, together with Professor Herbert Boyer, a biochemist at the University of California, a founder of recombinant DNA technology and a Nobel laureate in 1976.

At that time, Robert Swanson secured a capital of 100,000 US dollars for the company, while Professor Herbert Boyer contributed 26,000 US dollars of his savings. In return, Coller Perkins received a 25% stake.

Then in January 1977, when the money ran out, a venture capital firm called York Capital appeared and invested $850,000, taking a 25% stake in Genentech.

In just nine months, Genentech's valuation had soared from the initial $400,000 to $33.7 million.

However, at this time, Genentech's products were still in the experimental stage.

In August 1977, Genentech synthesized somatostatin, a brain hormone, a major breakthrough that brought Genentech a lot of attention and attracted more venture capital.

In May 1978, Genentech received its third round of venture capital investment, with an investment of 950,000 US dollars and a 8.6% stake acquired by Conston Capital, which was taken from Professor Herbert Boyer.

Because the venture capital industry had only been around for twenty years, the market was not very big, and many aspects were still imperfect. Venture capital firms had relatively more initiative over start-ups than in later generations. Therefore, the investment agreements signed by the two venture capital firms were different from those in later generations. The two venture capital firms continued to follow the investment to maintain their shareholding ratio. At that time, Genentech's valuation soared to $11 million.

In September last year, Genentech underwent a restructuring and made plans to go public. It has already started the approval process for listing.

However, the target is only Nasdaq, because for a company with low assets, negative profits and a high valuation like Genentech, the only place it can go public in the US is Nasdaq. The New York Stock Exchange, which is more influential and larger, is simply not an option for Genentech under its current conditions.

According to information, Genentech now has four shareholders, with the following shareholdings: Professor Herb Boyer, 41.4%; Cleller Perkins, 25%; York Capital, 25%; and Conston Capital, 8.6%.

According to last year's 1979 annual financial report, Genentech's total revenue was only 6 million US dollars. Due to the successful cloning of growth hormones, a number of research results are being transferred from the research and development stage to the approval stage and are ready for production, so the net profit is negative and the company's total assets are around 2.5 million US dollars.

But this does not prevent the capital market from having high expectations for Genentech!

So now you don't have to think to know that Genentech will be highly valued!

Xia Yu doesn't care whether the valuation is high or not, because no matter how high it is, it can't get much higher.

For someone with over 20 billion US dollars in cash, it's completely trivial!

Investigation results In addition to information on Genentech, there is also information on its three venture capital shareholders.

Of these, Coller Perkins is the weakest, having been founded in 1972 and managing four funds with a capital of less than 50 million US dollars.

Coller Perkins has not had a good investment eye, and Genentech has the best prospect for a return on investment so far.

But now Genentech has embarked on the road to listing, and if you want to reap the fruits, you have to wait at least half a year.

If Xia Yu's Polaris Capital can come up with more money than they expect, I believe Coller Perkins will not waste more than half a year waiting for an unknown.

After reading the information, Xia Yu called Peter Lynch and convened the acquisition team to meet and study the specific acquisition plan.

Xia Yu swept the faces of the crowd and set the tone: 'My goal is to acquire the equity of Coller Perkins, York Capital and Conston Capital, and suspend the listing process of Genentech.'

'The second step is to completely retain Professor Herb Boyer and, on that basis, acquire as much of his equity as possible!'

At this moment, the most valuable thing in Genentech is Nobel Prize winner Professor Herb Boyer, followed by his research team and the patents for the drugs they have developed. As for other laboratories, production lines, and so on, they are not important at all. You can buy better ones whenever you have the money!

In any company, the most valuable thing is people.

This is especially true in companies with a high proportion of research, and Genentech is still in its early stages of growth, so the value of people is almost concentrated in Professor Herb Boyer alone.

'Chairman, according to normal procedures, Genentech will be listed on the Nasdaq in September or October. The current market valuation of Genentech is generally between $100 million and $150 million. If we want to acquire the equity stakes held by the three venture capital firms, and combined with the lure of a listing, we will need to invest at least $100 million, or even $150 million,'

A middle-aged subordinate in the acquisition team stood up and said:

Xia Yu immediately replied with a firm handshake: 'Money is not a problem. The initial capital of the company is now 100 million US dollars. I can apply for more funds from above. As long as there are suitable projects, even 1 billion US dollars can be injected.'

'I would like to state here that the consortium behind the company has sufficient strength, and the issue of funding is not a consideration in future investment and acquisitions!'

Upon hearing this, everyone present was invigorated, and they realised that the company they had joined was not as simple as it appeared.

But isn't that even better?

In an instant, everyone's sense of belonging to the company increased greatly.

...

'So the difficulty now is to persuade the three venture capital firms to give up the idea of going public and sell their shares to us in advance for cash!'

After everyone had discussed it, Peter Lynch concluded.

'Chairman, Genentech is already in the process of going public, and the sooner the acquisition is made, the better. So I suggest dividing it into three acquisition teams and proceeding simultaneously.'

After saying this, everyone's attention turned to Xia Yu.

This was exactly what Xia Yu had in mind. He nodded and said, 'Well, let's split into three acquisition teams. I'll take charge of one, you take charge of one, and who wants to volunteer for the remaining one?'

'Me!'

'Chairman, I'm willing!'

'Chairman, I can do it!'

Several people immediately jumped forward.

Xia Yu's mouth curled up slightly. After letting several people explain their ideas, he appointed the one with the best idea as the head of the acquisition team, and the others were assigned to the three teams. Then, the remaining manpower was reported to Peter Lynch for deployment of other people from the company.

After that, several more meetings were held, and a complete acquisition plan and independent action plan were produced.

On 10 March, Xia Yu gathered everyone in the company conference room and, after delivering some inspiring words, immediately announced the action.

The three acquisition teams set off at the same time, heading towards the three companies.