Swiss drugmaker Roche is playing it tough in its quest to buy biotech giant Genentech, making a new, lower-priced hostile bid for the shares in the firm that it doesn’t already own.

In a shock move, Roche says it is replacing its original offer of $89 a share with a new bid of $86.50 a share, or $42 billion in total, after takeover talks with Genentech’s special board of directors crumbled.

After being approached with Roche’s original proposal last year, Genentech set up a special committee of independent directors to consider the bid, which was subsequently rejected as it was felt that it substantially undervalued the firm. However, due to “the lack of progress towards an agreed transaction since then”, Roche is now approaching Genentech shareholders directly with its new, lower offer, the Swiss drugmaker said in a statement.

“We intend to create unrivalled benefits for our patients, employees and shareholders by combining Roche and Genentech [and] are disappointed that the discussions over the last six months between Roche and the special committee of Genentech have not produced a negotiated agreement,” said Franz Humer, Roche’s Chairman. “We feel it is now time to give the Genentech minority shareholders the opportunity to decide on our offer.”

“Especially in the current market environment the offer provides an opportunity for all public shareholders to achieve liquidity and to receive a fair price for all their shares,” he stressed, but Genentech’s special committee said it is “disappointed that Roche has taken this unilateral and opportunistic step in an attempt to take advantage of current market conditions,” and has urged shareholders to take no action while it considers its position.

Plans for the new group
Roche has, for the first time, unveiled some of its plans for the newly combined company, perhaps to help shareholders make a decision. It says it plans to operate Genentech’s research and early development activities as an independent unit within Roche from its existing site in South San Francisco, while the Swiss group’s US Pharmacommercial operations would be relocated from Nutley to the same campus.

“The combined company’s US commercial operations in pharmaceuticals will reflect the Genentech name, leveraging the strong brand value of Genentech in the US market,” the company assured. But all eyes will now be on the biotechnology giant’s next move, which should become apparent within the next two weeks.