Genentech Completes Early Buyout of 2 Partnerships

Genentech on Friday completed the early buyout of its two limited research and development partnerships, paying in stock valued at more than $425 million.

Investors in the two ventures approved the buyouts, despite opposition by two limited partners, in voting that concluded Tuesday.

The biotechnology company, based in South San Francisco, said the buyout will result in a one-time charge against its fourth-quarter 1986 earnings of about $370 million. The limited partners received shares in Genentech, valued at $85.50 a share on the basis of Friday’s closing price, in exchange for their holdings in the partnerships.

The buyout of Genentech Clinical Partners Ltd. was approved 865 to 31. For each $50,000 unit in that venture, Genentech traded 3,000 shares of its stock. Although contested by two limited partners, the buyout of Genentech Clinical Partners II was approved by a 404-224 vote. Genentech will exchange 2,500 shares of stock for each $50,000 unit.

Joseph Benaron, one of the two limited partners opposing the buyout of the Partners II venture, expressed dissatisfaction with the way Genentech had handled the voting. A recount and a polling of the partners would be requested, he said on Wednesday, adding that a lawsuit against the buyout was being considered.

“This will be a long, continuing battle, I believe,” Benaron said.