Updated from 12:36 a.m. EST

Genentech

(DNA)

to its shareholders: Just say no to

Roche

.

On Monday night, Genentech said a special committee of its board recommended that shareholders reject the hostile tender offer from Roche. The Swiss drugmaker is trying to

wrest control

of the 44% of Genentech it doesn't already own, offering Genentech's minority shareholders $86.50 a share.

"Genentech's strong projected financial performance implies a valuation substantially in excess of Roche's offer price," said Charles Sanders, chairman of Genentech's special board committee, in a statement.

As previously disclosed in Roche's tender offer documents earlier this month, Genentech and its financial advisors asked Roche to pay $112 a share to acquire the remainder of the biotech company.

Roche's tender offer expires on March 12. The drugmaker has stated publicly that it believes Genentech's minority shareholders will accept its $86.50-a-share offer. Generally speaking, most Wall Street observers remain largely skeptical and believe that a higher purchase price will be the only way a deal gets done.

Genentech filed a document with the

Securities and Exchange Commission

Monday night formally responding to Roche's hostile tender offer. The document recounts Genentech's version of events before, during and after Roche made public its attempt to acquire the rest of the company.

The SEC document also rebuts many of Roche's claims, including one alleging that Genentech wasn't negotiating in good faith to come up with a mutually agreeable price for the company.

"Over the past seven months, the special committee persistently attempted to work constructively with Roche and we were consistent in our stated willingness to negotiate toward a price that recognizes the full value of Genentech and reflects the significant benefits Roche would enjoy as a result of full ownership," said Sanders in a statement.

"Even after all our efforts, and despite the acknowledgement of additional value as reflected in its advisors' analyses, Roche refused to increase its original $89 proposal and to engage in productive negotiations with the special committee regarding a mutually acceptable valuation," Sanders added.

Genentech suggests that the seeds of Roche's desire for greater control over Genentech's business affairs were sown in late 2007. At that time, Roche asked for changes to be made to the agreement governing Roche's ownership stake in Genentech.

When Genentech's independent directors refused Roche's request, a Roche executive told a Genentech official that there would be "consequences," according to Genentech's SEC filing.

Genentech also asserted that its long-range financial plan, used to derive the $112 asking price, accurately reflects the growth and profitability of the company. Roche has objected to this forecast, claiming its assumptions and calculations are overly optimistic.

Genentech shares were recently up 70 cents, or 0.8%, at $85.25.

At the time of publication, Feuerstein's Biotech Select model portfolio was long DNA.

Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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