Hoffmann-La Roche’s Big News: Face Lift : Reorganization a Letdown to Speculators on Potential Takeovers

BASEL, Switzerland —  F. Hoffmann-La Roche & Co., whose antiquated financial structure had made it an oddity among Swiss companies, plunged into the modern age today by announcing a series of sweeping reorganizations.

But speculators who had hoped Switzerland’s third-largest chemical company would announce a major acquisition came away disappointed. On Wall Street, shares of several companies declined after being bid up Friday on anticipation they would be targets of Hoffmann-La Roche.

Instead the company announced a three-step plan to update its financial setup: severing the link between its shares and those of its overseas holding company, forming a new holding company for the group’s operating subsidiaries and expanding its equity base.

The effect of the reorganization would be to make it easier for the company to carry out a takeover, even though none was announced.

Among the companies Hoffmann-La Roche has reportedly been eyeing for a takeover are Syntex Corp., Philadelphia-based SmithKline Beckman Corp. or Britain’s Beecham Group FLC. SmithKline and Beecham recently announced their intention to merge.

The new holding company’s equity will be much simpler, cheaper and more liquid than Roche’s existing shares and dividend rights certificates, which are among the highest priced in Switzerland.

With the new structure it will have an easier time if it chooses to buy another company using stock.

The Hoffmann-La Roche announcement of the major reshuffle almost overshadowed its report of strong financial results, including a 33.1% leap in 1988 group net profit and 21.2% dividend increase.