Roche Holding on Monday said it was offering $43.7 billion to take over the remaining shares of Genentech Inc. and create the seventh-largest pharmaceuticals company in the U.S.

Roche, which already owns 55.9 percent of the San Francisco-based drug maker, said it was offering $89 per share, 8.8 percent above the closing price Friday and 19 percent above the price a month ago. It's the largest offer ever made by a Swiss company for a takeover.

Franz Humer, Roche board chairman, said Roche's investment in Genentech over the years has helped it to focus on innovation and long-term projects, leading to some of the most important breakthroughs in the treatment of cancer and other life-threatening diseases.

"Our long and successful participation in Genentech has provided great benefits to both of our companies and shareholders. It has resulted in one of the biggest success stories in the healthcare industry," he said.

Global Insight analyst Gaelle Marinoni said 8.8 percent above the closing price Friday was not a big premium but as Roche already owned the majority of shares, the offer was "probably fair."

Minority shareholders "might try to get a little more," she said.

The announcement came as Roche announced its first half net profit declined 2 percent to $5.6 billion in view of a weaker U.S. dollar and a sharp drop in government purchases of the anti-viral Tamiflu because anti-pandemic stockpiles have been filling up.

Net income was down from $5.8 billion for the same period a year earlier. Roche reports profit figures only for the first six months and full year.

Sales were $19.6 billion, down 4 percent from the first half of 2007.

Roche has been a partner with Genentech since 1990.

Genentech did not immediately return a message seeking comment.

The combined company would generate more than $15 billion in annual revenue and employ a total of about 25,000 people in the U.S., Roche said in a statement. The Basel, Switzerland-based company did not specify how many of the 10,700 employees of Genentech would be retained.

Roche said the takeover would improve operational efficiency by reducing complexity, eliminating duplications and increasing scale in the United States.

Roche said Genentech's San Francisco site would operate as an independent research and early development center and become headquarters of combined U.S. commercial operations.

The statement said it expects the Genentech Board of Directors will establish a committee of independent directors to evaluate Roche's proposal with the assistance of independent outside financial and legal advisers.

Genentech board members who are employees of Roche will not participate in the evaluation of the proposal, it said.

The statement said Roche plans a cash merger between Genentech and a Roche subsidiary and that all currently outstanding shares and options of Genentech other than shares owned by Roche would be converted into cash.

Precise terms will be determined through negotiations with the independent directors, it said, adding that it expects the merger would be subject to the approval of holders of a majority of the Genentech outstanding shares not held by Roche.

"Roche expects to complete the transaction as soon as possible following negotiation of a definitive merger agreement," it said.