Forex adds 8 pct to Roche's Genentech bid -Citi

ZURICH, Oct 2 (Reuters) - The rise of the U.S. dollar against the Swiss franc has made Roche Holding AG's (ROG.VX) $43.7 billion bid for Genentech Inc DNA.N up to 8 percent more expensive, Citi analysts said.

"The CHF-USD rate has risen by 8 percent since the day Roche announced the offer for Genentech minorities. This essentially prices the deal as 8 percent more expensive," Citi said in a research note.

Genentech has traded at a big premium to Roche's $89 per share offer since the Swiss drugmaker unveiled its unsolicited bid for the 44 percent of the U.S. biotech group it does not already own in July.

But the stock fell below the offer price this week as funding fears triggered by the global credit crisis stoked uncertainty and raised doubts about the scope for a sweetened offer.

The original $89 offer would effectively now cost Roche $96, thanks to the fall in the franc, Citi said.

According to Citi's analysis, an 8 percent move in the exchange rate would require a $3 per share reduction in the offer price and 25 basis points cut in the interest rate to achieve an accretion of more than 1 percent to first-year earnings.

"Whilst we expect a raised offer, too high would give away most of any pipeline upside to Genentech shareholders, whilst if a modest increase is accepted by Genentech's independent board, this may signal minimal upside to the Genentech pipeline," Citi added.

Roche has said it remains committed to a deal, but worsening loan markets are forcing it to work harder to get its money. (Reporting by Sam Cage; Editing by Quentin Bryar)