GENEVA (AP) -- Swiss pharmaceutical giant Roche agreed to pay $46.8 billion to buy the 44 percent of biotech pioneer Genentech that it doesn't already own, ending a long corporate struggle with its U.S.-based cancer drug partner.
The $95-per-share deal brings Roche all of the sales of Genentech's highly profitable cancer drugs as well as its promising research pipeline and scientific corporate culture.
The deal, approved by Genentech's board after a long corporate struggle, offers $95 per share for the 44 percent of South San Francisco, Calif.-based Genentech Inc. that Basel-based Roche Holding AG doesn't already own.
It is the latest in a burst of megadeals among drugmakers, 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.
Roche expects to save $750 million to $850 million per year by eliminating duplication but did not give a figure for potential job cuts.
The agreement ends Roche's hostile bid for Genentech. Genentech's board rejected Roche's initial friendly bid of $89 per share in July. Roche then surprised the company and Wall Street with a lowered $86.50-per-share bid on Jan. 30, aimed directly at shareholders.
Hanging over the negotiations have been study data expected to be released in April on the effectiveness of Genentech's Avastin in treating early-stage colon cancer. The drug, Genentech's best-selling product, is already approved for various types of breast, lung and colon cancers. Some analysts said a positive study could increase the value of Genentech shares.
Roche said the combined company would be the seventh-largest U.S. pharmaceutical company in terms of market share and would generate about $17 billion in annual revenue with a payroll of around 17,500 employees in the U.S. pharmaceuticals business alone.
A joint statement by both companies said the special committee of Genentech's board of directors had approved the agreement and recommends that Genentech shareholders tender their shares in Roche's offer.
"We believe this is a fair offer for Genentech shareholders, and the committee is pleased to come to a successful conclusion of this process," said Charles Sanders, chairman of the special committee of Genentech's board of directors. "We look forward to working with Roche to complete the transaction as expeditiously as possible."
Franz B. Humer, chairman of Roche, said he was pleased that the two sides could agree.
"Working together, we aim to close the transaction quickly, thus removing uncertainty for employees and allowing us to focus even more intently on innovation and long-term projects. We have tremendous respect for our colleagues at Genentech and look forward to working with them to further accelerate our search for solutions to unmet medical needs."
Roche said its Pharma commercial operations in the U.S. will be moved from Nutley, N.J., to Genentech's site in South San Francisco, which will become headquarters of the combined company's U.S. commercial operations in pharmaceuticals and operate under the Genentech name.
It said this would take advantage of "the strong brand value of Genentech in the U.S. market."
Research and early development will operate as an independent center within Roche from its existing campus in South San Francisco, it said.
Genentech, which calls itself the "founder of the biotechnology industry," was created in 1976 and has worked closely with Roche for two decades.
Roche acquired a 60 percent interest in Genentech in 1990. It bought out the rest of the shares nine years later but then reduced its stake through three public offerings between July 1999 and March 2000.
The Genentech acquisition is described as the largest deal in Swiss corporate history, eclipsing the $39 billion takeover of U.S. eye care company Alcon announced last April by Roche's Swiss rival Novartis AG.
Roche shares dropped 0.82 percent to 144.30 Swiss francs ($124.38) on the Zurich exchange following the announcement of the Genentech deal. Genentech shares rose $2.25, or 2.4 percent, to $94.42 in premarket trading after closing at $92.17 Wednesday.