Drugmaker raises Genentech bid

Bloomberg

The deal ends a nearly 8-month battle, adding 9.8 percent to Roche’s lowest offer for California-based Genentech. Roche expects the takeover to add to its earnings in the first year after completion, the Basel, Switzerland-based company said yesterday in an e-mailed statement. The latest offer is 3 percent more than Genentech’s closing share price Wednesday.

Full control will help Roche pare costs and boost income from the U.S. company’s cancer medicines as growth in the broader drug industry slows. The acquisition will also ensure access to Genentech labs after an existing accord ends in 2015. The purchase was approved by a special committee set up by Genentech’s board to evaluate Roche’s offer.

"We believe this is a fair offer for Genentech shareholders," said Charles Sanders, chairman of the special committee, in the statement. "We look forward to working with Roche to complete the transaction as expeditiously as possible."

Roche bid $89 a share in July and went directly to shareholders last month with a lower $86.50 offer after failing to reach agreement with Genentech. It increased its offer on March 6 to $93 a share after the U.S. company rejected the earlier proposals as too low.

Roche said research and early drug development will operate as an independent center within the group. Genentech’s South San Francisco site will become the headquarters of the companies’ combined U.S. commercial operations. The transaction will add to Roche’s earnings in the first year after closing, the Swiss drugmaker said.

Roche has raised about $39 billion through bond sales to help fund the all-cash deal. As of Wednesday, approximately 2.9 million Genentech shares had been tendered. The latest offer ends March 25, and all shareholders will be entitled to $95 a share.

The combination, with a total $17 billion in annual sales and about 17,500 employees in the U.S. pharmaceuticals business, will be the 7th-largest U.S. drugmaker in terms of market share, Roche said.