Swiss drugmaker Roche Holding AG offered to acquire all outstanding shares in its U.S. partner Genentech Inc for $43.7 bln in cash to reinforce its position in cancer medicines.
Roche, which already owns 55.9% of Genentech, said on Monday it would offer $89 per share to buy up the remaining stake, a 9% premium to the biotech company's closing share price on Friday.
Basel-based Roche also said its first-half net profit fell 2% to 5.73 bln Swiss francs ($5.62 bln), hit by loss of sales of influenza drug Tamiflu and the weak U.S. dollar, but beating forecasts.
Roche stock fell 2.8% to 174.50 francs by 0702 GMT as investors worried about the cost of the Genentech move, though analysts welcomed the strategic rationale and access to interesting assets.
"The takeover of the innovate oncology powerhouse could really pay off for the Basel company in the mid-term. The timings looks opportune given the current low U.S. dollar," Wegelin analysts said in a note.
The Genentech bid is the latest in a string of acquisitions of promising biotech assets as large pharmaceutical companies snap up interesting new drugs to fill sparse new product pipelines.
Roche would gain control of all revenues for big-selling Genentech cancer drugs Avastin and Herceptin, as well as absorbing an attractive portfolio of new medicines.
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But trades said the 9% premium offered by Roche looks low. It compares with an average of 63% for recent pharmaceutical buys of biotech companies, according to Credit Suisse.
Roche expects the combination to generate annual pretax cost synergy benefits of about $750-$850 mln and to be add to earnings per share in the first year after closing.
The company confirmed its full-year forecast and said it was still committed to increasing its dividend pay-out ratio for the next three years.
It will fund the purchase partly from its large cash pile and Chief Financial Officer Erich Hunziker said Roche was talking to several banks and saw no problems in putting together "attractive" financing for the deal.
Roche did not give further details of how it will fund the buy or how it would achieve the expected synergies.
