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Roche cuts Genentech bid to $42.5 bln

Swiss drugmaker Roche Holding AG launched a hostile bid for Genentech on Friday and lowered its offer for the remaining 44% of the US biotechnology company it does not already own.

Roche is now offering $86.50 per share in cash, valuing the deal at $42.5 billion, after initially offering $89 a share in cash, which valued the original bid at $43.7 billion.

The offer is at a premium of nearly 3% over the Genentech's closing price of $84.09 on Thursday.

Buying Genentech would give Roche control of all revenues for big-selling cancer drugs Avastin and Herceptin, as well as absorbing an attractive portfolio of new medicines.

Roche's new offer comes as a surprise as investors had initially expected the Swiss group to sweeten its bid for Genentech after it rebuffed Roche's initial offer, saying it undervalued the company but it would consider a higher offer that reflected the benefits of an acquisition.

But the credit crisis has raised doubts about Roche's ability to secure the necessary financing to conclude the deal.

“The commencement and completion of the tender offer does not require any approval by the special committee or the Genentech board, and Roche has not asked the special committee to approve the tender offer,” the group said.

Roche, which currently owns 55.8% of the Genentech outstanding shares, expects to commence the tender offer within approximately two weeks.

The group plans to finance the deal through its own funds, commercial paper, bonds and bank loans, Roche said. (Reuters)