Roche CEO confident on Genentech deal financing

By Ben Hirschler

LONDON, Sept 16 (Reuters) - Roche (ROG.VX) is confident it can secure financing at a reasonable price for the acquisition of Genentech DNA.N, despite current market turmoil, the Swiss drugmaker's chief executive said on Tuesday.

Some analysts have questioned whether worsening credit conditions might derail Roche's attempt to buy out the 44 percent of the U.S. biotech group it does not already own, especially since it may have to sweeten its offer.

But Severin Schwan told a Merrill Lynch healthcare conference in London he believed attractive financing could still be achieved.

A Roche spokesman said Schwan also told the meeting that recent fluctuations in the dollar-Swiss franc exchange rate had not altered Roche's willingness to do a deal.

Genentech has rejected Roche's current offer of $89 a share and the consensus of industry analysts polled by Reuters last month is that it will have to increase its bid to around $107.5, raising the cost of the deal to $53 billion from $43.7 billion.

Genentech stock was trading on Tuesday at around $93, indicating shareholders are expecting a higher offer.

Roche aims to finance the acquisition by using a combination of existing funds and debt financing. It argues that the substantial combined cash-flows of the enlarged group will allow rapid repayment of the debt.

Schwan did not go into details about his strategy but reiterated that his aim was to achieve a negotiated settlement.

Just how much more Roche can afford to pay for Genentech hinges in large part on expectations for future sales of its blockbuster cancer drug Avastin.

If, as several analysts predict, the medicine proves effective in treating colon cancer at an earlier stage, after surgery, analysts believe billions of dollars will be added to its market value.

With key clinical trial data due in November, Roche may well be eager to strike a deal sooner rather than later, many analysts believe.

A rapid deal would also reduce the risk of staff defections from Genentech. (Editing by Elaine Hardcastle)