At its annual general meeting, Swiss drugmaker Roche also said it had started 2009 well, with operating profit growth better than expected, and was very confident about the outlook for the full year.
The source had told Reuters on Monday Roche was in talks to buy the shares in Genentech it does not already own for about $95 each.
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 source said the two companies began negotiations after Roche raised its offer price on Friday to $93 per share and said that it was confident of a successful conclusion to the drawn-out takeover battle.
On the 6 of March we adjusted our offer to $93, Chairman Franz Humer told the company's annual general meeting.
The offer provides an opportunity for all Genentech shareholders to receive a fair cash price for their shares in the near term in the current difficult market environment, Humer said.
Roche stock was up 3.3 percent at 137.70 Swiss francs by 1400 GMT (10 a.m. EDT), when the DJ Stoxx European healthcare sector index <.SXDP> was down 0.3 percent.
Cheuvreux analyst Marcel Brand said even a deal at $95 per share would still be strongly accretive to Roche earnings -- and a completed deal could help the Swiss company's stock.
As soon as independent directors agree to the deal, we expect a substantial flow of funds from selling Genentech holders into Roche shares, Brand said in a note.
Full ownership of Genentech would give Roche rights to the biotech company's portfolio of lucrative cancer drugs and other medicines, including Avastin, which is approved to treat advanced colon, breast and lung cancers and is being tested for several other uses.
Humer said Genentech management's demand for $112 per share was not based on realistic assumptions about the future.
A price below $100 has to be seen as positive and also earnings-enhancing, analysts at Julius Baer said in a note.
Roche has also performed well in the first two months of 2009 and is confident for the full year, even though the market environment is challenging, its chief executive said.
We continued to perform strongly in the first two months of 2009. Sales in both divisions grew in line with our expectations, and operating profit grew even better than anticipated, Severin Schwan said in a speech text.
We are accordingly very confident about the outlook for the full year, Schwan said.
(Additional reporting by Jason Rhodes in Zurich; Editing by Greg Mahlich)