Genentech stance could boost Roche offer: analysts

LOS ANGELES (Reuters) - Several Wall Street analysts on Friday said they expect Genentech to be sold for a higher price after the biotechnology company signaled a more aggressive stance toward an unsolicited takeover offer from majority owner Roche Holding AG (ROG.VX).

Genentech, based in South San Francisco, California, said late Thursday a committee of its independent directors is assessing Roche's offer, but is not obligated to approve any transaction.

Basel, Switzerland-based Roche has offered to pay $89 a share, or $43.7 billion, to acquire the 44 percent of Genentech it does not already own.

"It seems clear from Genentech's response that they are at least positioning themselves in potential opposition to this deal," said RBC Capital Markets analyst Jason Kantor.

He said Genentech's stance increases the risk that the deal will fall through or be delayed, but also likely ups the potential purchase price.

Kantor raised his price target on Genentech's stock to $100 from $95.

Shares of Genentech were up about 1 percent at $95.56 in afternoon trading on the New York Stock Exchange.

"The committee is not obligated to agree to any process or transaction price, and we expect a negotiation with Roche's management," Oppenheimer analyst Bret Holley said in a research note.

"We believe $102 to $110 a share is a more acceptable price range, and we see a high probability that Roche will bid higher," he said.

Holley raised his Genentech share price target to $105 from $88.

Roche's $89-per-share bid represents a premium of 8.8 percent to Genentech's closing share price on the day before the offer -- a valuation many have called too low for what could be called the world's preeminent biotechnology company.

Genentech is the maker of top-selling cancer drugs Avastin, Herceptin and Rituxan.

Deutsche Bank analyst Mark Schoenebaum on Friday raised his Genentech share price target to $97 from $85, citing increased negotiating leverage for the biotech giant.

He said in a research note that the price is seven times estimated 2009 revenue for Genentech -- a 10 percent discount to large biotech merger deals over the past seven years since Roche will likely not need to pay a change of control premium.

"We believe investors can now feel confident that Genentech has sufficient leverage to negotiate a higher price for any potential Roche transaction," Schoenebaum said, adding that risk has also increased that the asking price could exceed Roche's threshold.