Roche offers $43.7B for rest of Genentech

GENEVA -- Swiss pharmaceutical maker Roche on Monday offered $43.7 billion for the remaining shares of its U.S. biotech partner Genentech Inc., seizing the opportunity offered by the weak U.S. dollar to grab a bigger share of earnings from such Genentech drugs as blockbuster cancer treatment Avastin.

Roche Holdings AG already owns 55.9 percent of the South San Francisco, Calif.-based drugmaker. It offered $89 per share, 8.8 percent above Genentech's closing price Friday and 19 percent above the price a month ago.

But Genentech shares climbed well above that offer in premarket trading on Monday, jumping $13.11, or 16 percent, to $94.93 -- a bet that the bidding will go higher. Genentech's board is expected to name a committee to evaluate the offer.

Roche shares dropped 2 percent to 175.90 francs ($172.06) on the Zurich exchange after the disclosure, which coincided with Roche's announcement of a 2 percent decline in its first half net profit.

The weak U.S. dollar makes American assets cheaper for foreigners, a factor in the proposed $52 billion takeover of U.S. brewer Anheuser-Busch Cos. by Belgian-based multinational InBev SA. The dollar is sagging under U.S. subprime mortgage crisis woes, a big trade deficit, and interest rate cuts by the U.S. Federal Reserve.

"The timing has a lot to do with the weak dollar," said Beatrice Kunz, analyst with Clariden Leu said. "It's not only the currency but the currency is helping."

Kunz said the Roche stock weakness indicated that Roche might have to increase the price to ultimately get the deal done. "Investors doubt whether they get it for this $89 (per share) and maybe the company is trying to get a better price," she said. "But I don't think the better price is coming from another company."

The company said its earlier investment in Genentech had helped the biotechnology company focus on innovation and long-term projects, "leading to some of the most important breakthroughs in the treatment of cancer and other life-threatening diseases."

Roche codevelops and markets Genentech products outside North America. It said the takeover would "accelerate the search for new solutions for unmet medical needs."

"The combined entity will be the seventh largest U.S. pharmaceuticals company in terms of market share," Roche said in a statement from its Basel headquarters. "It will generate more than $15 billion in annual revenues."