Roche Holding AG is in talks to buy the shares of Genentech Inc it does not already own for about $95 each, a source familiar with the situation said on Monday.

The two companies began negotiations after Roche raised its offer price on Friday to $93 per share and reiterated it was confident of a successful conclusion to the drawn-out takeover battle.

Roche is trying to acquire the 44 percent of Genentech it does not already own. At $95 per share, the deal would be valued at $46.7 billion.

The new price was enough to get both sides to the table, said the source, who was not authorized to speak to the press.

Genentech declined to comment.

We announced last Friday a very attractive tender offer for $93 per share and it is now up to the shareholders to decide, said Roche spokesman Alexander Klauser, who declined to comment further.

The Wall Street Journal said an agreement could be announced as early as Monday afternoon, though talks could still break down. Roche is scheduled to hold its annual shareholder meeting on Tuesday.

Genentech had urged shareholders to take no action on Friday's $93 per share offer and said the special committee of its board would make a formal response promptly and explain the reasons for its position.

Analysts had generally agreed that Roche's previous offer of $86.50 had little chance of success, especially as it represented a decline from the $89 Genentech rejected last summer. Genentech's advisers previously said the company was worth $112 a share.

Analysts believe Roche is hoping to complete the deal ahead of data from a study due in April on Genentech's most important cancer drug, Avastin, that if positive could significantly boost its share price.

I would be shocked if their (Genentech's) special committee agreed to that, Matt Loucks, a portfolio manager for Sit Investment Associates of Minneapolis, which holds about 348,000 shares of Genentech, said of the possible $95 deal price.

In my opinion any price in the mid-90s undervalues Genentech long-term, Loucks said.

Still, for people who don't want to step in front of key Avastin trial data expected next month, $95 is a reasonable offer, Loucks said.

Andrew Weiss at Swiss bank Vontobel said he saw $95 to $100 a share as a fair reflection of Genentech's value and said Roche might have to raise its bid again to get the deal done.

Roche's improved bid and prolonged tender offer deadline, in our view clearly signal Roche's intent to soon take Genentech private, Weiss said.

Shares of Genentech gained $1.98, or 2.2 percent, to $92.84 in afternoon trading on the New York Stock Exchange.

(Reporting by Jessica Hall in New York, with additional reporting by Deena Beasley in Los Angeles, Sam Cage in Zurich and Toni Clarke in Boston; editing by Jeffrey Benkoe and Gerald E. McCormick)

Medicine