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Genentech relents to Roche's overtures

Remaining stake goes for $46.8b

Associated Press / March 13, 2009
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NEW YORK - Swiss drug company Roche Holding AG agreed yesterday to pay $46.8 billion to buy the 44 percent of California-based biotech pioneer Genentech Inc. it doesn't already own, ending a long corporate struggle between the companies.

The deal, which values Genentech at more than $100 billion, underscores the lengths drug makers are willing to go to shore up their weak pipelines.

And investors and the industry will be watching to see whether Roche can preserve the research culture that helped Genentech, of South San Francisco, Calif., all but start the biotech industry.

The $95-per-share deal brings Roche, whose best-known products include the flu treatment Tamiflu and the tranquilizer Valium, all of the sales of Genentech's highly profitable cancer drugs as well as its promising research pipeline and scientific corporate culture.

A majority of shares besides Roche's still must be tendered for the deal to happen, with a deadline of March 25.

It is the latest in a burst of megadeals among drug makers, following Merck & Co. Inc.'s announcement Monday that it would acquire Schering-Plough Corp. and Pfizer Inc.'s pending acquisition of Wyeth.

A dearth of new products and push for cost savings are driving the rush to combine. The deal values Genentech as a whole at $100.1 billion when including the portion of the company already owned by Roche. That nearly matches the $109.1 billion combined total for Merck's and Pfizer's acquisitions.

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