Will Roche and Genentech come to fisticuffs?

The back-and-forth sparring going on between US biotech heavyweight Genentech and its majority shareholder Roche is gaining steam, with both companies taking bold actions to further their purposes.

During an investors’ meeting Monday, Genentech stood firm in its rejection of Roche’s recent $42 billion offer to take full ownership. CEO Art Levinson outlined a number of ways in which the company believes its long-term value is much higher, including the worth of current products and promising drugs in development, even going so far as to set Roche’s sales growth aflame in an animated presentation while removing Genentech’s contribution.

Genentech’s management also touts the value of its innovative scientists and has argued that an increase in Roche control without proper compensation could threaten the innovative culture behind the success of Genentech. The company’s board believes that Roche should be offering $112 per share instead of its current hostile bid of $86.50 per share.

Roche, on the other hand, has gone forward with its share offering, hoping to convince Genentech’s other stockholders that it means business without having to gain the Genentech board’s approval. Roche has raised about $30 billion for the acquisition through investment bonds issued in the US and Europe, proving that it can raise the necessary funds without relying on banks in the volatile credit market.

Some analysts speculate that Roche is gearing up to make a higher offer, but there is also the possibility that it will simply drop its efforts if the tender offer is unsuccessful or if the overall condition of the stock market continues to deteriorate. And while Genentech has indicated that it would accept and endorse a higher offer from Roche, the company’s willingness may be hindered by Roche’s hostile attitude.