Inflation’s a killer. Especially when you pony up that kind of lumber and your shares still fall. But we expect a suitor as mammoth as Basel-based Roche Holding, the world's biggest maker of cancer drugs, won’t be put off so easily in pursuing its American target. Read on for all you need to know about this merger-in-the-making.

Roche Holding AG offered to buy the rest of Genentech Inc. for $43.7 billion to gain the U.S. company that supplied it with the best-selling Avastin and Herceptin tumor medicines.

Investors in Genentech would get $89 a share in cash, 8.8 percent more than the July 18 closing price, the Basel-based drugmaker said today. Roche already owns 56 percent of the South San Francisco, California-based company.

Roche today reported a decline in first-half profit as sales of the Tamiflu pill fell because governments stopped stockpiling the medicine that could slow an influenza pandemic. The purchase would be Roche's biggest ever and the combined company would generate more than $15 billion in annual sales. Roche shares declined the most since January on investor concerns it'll have to raise the bid for Genentech, the world's second-biggest biotechnology company.

"The transaction has positive and negative aspects," Rahn & Bodmer analyst Birgit Kulhoff said today in a note to investors. "Roche can protect operating margins and EPS growth through this acquisition." The "very low premium" means that Roche either sees the prospects for Genentech "very negatively, which would justify a low valuation, or the offer to Genentech shareholders will have to be raised."

Roche fell as much as 3.7 percent to 173 Swiss francs and declined 5.7 francs, or 3.2 percent, at 10:54 a.m. in Zurich trading. The shares had decreased 8.2 percent this year, outperforming the Bloomberg Europe Pharmaceutical Index of 19 companies, which has declined 12 percent. Genentech rose 5 euros, or 10 percent, to 56.30 euros ($89.48) in German trading today.

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