The firm says that the offer ‘substantially undervalues the company’.
Genentech Inc rejected a $43.7 billion takeover bid from Roche Holding AG as too low, while saying it would be open to a higher proposal.
The $89-a-share offer in July for the portion of Genentech that Roche doesn’t already own “substantially undervalues the company,” a committee of Genentech directors said today in a statement.
They would consider a “proposal that recognises the value of the company and reflects the significant benefits that would accrue to Roche as a result of full ownership”.
Genentech’s response followed criticism by investors and analysts that Roche, the world’s largest maker of cancer drugs, was trying to get a bargain on the 44 per cent of Genentech it doesn’t already own.
Genentech’s leading US product, Avastin, is being tested against 30 different malignancies and may become the first-choice drug against colon tumours if it’s successful in studies to be released early next year.
“I expect Roche will come back with a higher offer, though I don’t think that it will pay a traditional takeover premium in excess of 50 per cent, as they already control Genentech,” said Martin Voegtli, an analyst at Sal Oppenheim in Zurich, in a telephone interview today.
Genentech rose 75 cents to $98.60 at 10:55 am in New York Stock Exchange composite trading.
Roche rose 2.8 Swiss francs, or 1.5 per cent, to 188.2 francs in Zurich trading.
Genentech of South San Francisco, California, is the world’s second-biggest biotechnology company after Amgen Inc.
Negotiations Soon: The response means that negotiations between Gene ntech and Roche, of Basel, Switzerland, will begin shortly, with a likely resolution in one to two months, said Mark J Schoenebaum, an analyst with Deutsche Bank Securities in New York, in a note to clients today. Geoff Teeter, a Genentech spokesman, said the company had no comment beyond the release.
“We would point out that the Genentech press release appears friendly,” Schoenebaum said today in his note. “Thus, consummation of a deal continues to seem likely.”
Control of the remainder would give Roche more income from Avastin and from Herceptin, another cancer drug, and ownership of compounds being developed by the US biotechnology company.
“Roche continues to believe its proposal is fair and generous and has no further comment at this point,” the company said in a statement.
The Swiss company said in July that the proposed takeover would cut costs and boost its profit from Genentech medicines.
The purchase had the backing of the Oeri and Hoffman families, who control the company, Roche said. They are heirs of Fritz Hoffmann, who started F Hoffman-La Roche Co in 1896.
