Genentech rejects Roche bid

Genentech Inc. rejected drug maker Roche Holding’s $43.7-billion takeover bid as shares of the biotechnology company rose 11% higher than the offer Wednesday.

The $89 a share that Roche proposed July 21 “substantially undervalues the company,” a committee of Genentech directors said Wednesday. Investors have said it could take a bid as high as $125 a share for Roche to purchase the 44% of Genentech it doesn’t already own.

“As a Genentech shareholder, I like this as a company, so $125 is my internal price, where I feel like I’m getting fair value for my shares,” said Sven Borho, who manages 2.7 million shares of Genentech for OrbiMed Advisors in New York. “It would still be a shame that the company would cease to exist, but I’d tender my shares.”

Genentech, based in South San Francisco, said it was open to further talks with the world’s largest maker of cancer drugs, while Roche said it continued to believe its proposal was “fair and generous.” Genentech’s top U.S. product, Avastin, is being tested against 30 different malignancies. Positive data on its use as a first-choice drug against colon cancer, expected next year, could add $2.2 billion to its $3.4 billion in annual sales.

Under an agreement between Genentech and the Swiss drug maker, a sale or acquisition of the company must be approved by holders of a majority of shares other than Roche, according to a Genentech regulatory filing.

Genentech shares rose 52 cents to $98.37.