Roche's $46.8 billion Genentech deal outshines others

"With this deal, Roche secures itself the operating cash flow from Genentech it does not already own, access to Genentech's pipeline beyond 2015 and gains access to Genentech's cash pool of roughly $10 billion," said Vontobel analyst Andrew Weiss.

Roche had raised its hostile bid to $93 per share from $86.50 last week, which had prompted the restarting of talks between the two companies, Chairman Franz Humer said.

Roche's shares were up 1.3 percent at 147.40 Swiss francs by 1535 GMT (11:35 a.m. EDT), with the DJ Stoxx European healthcare sector index .SXDP up 1.0 percent, adding to gains in recent days on expectations Roche would get the deal done and improve its performance with Genentech fully embedded.

Genentech rose 2.0 percent to $94.01.

CRISIS BACKGROUND

Roche's initial bid was rejected last year and the Basel-based company turned hostile after several months, during which time the financial crisis raised doubts about financing and Genentech's shares fell below the offer price.

Roche, however, successfully raised $39 billion in the bond market which, together with cash on hand, gave it the financial firepower to get a deal done. The combined group would be the seventh largest pharmaceuticals company in the United States by market share, with around $17 billion in U.S. annual revenue.

Roche's Humer said he did not believe there was a danger of losing Genentech employees -- a risk some analysts have voiced -- adding the deal would give an enormous amount of security to employees of both companies.

The Swiss group will look at ways of retaining key Genentech staff and has no plans for job losses in research and early clinical development. It expects to keep the sales forces of both companies, but will look at savings in other areas.

Humer is to meet with Genentech chief executive Arthur Levinson as quickly as possible to discuss whether Genentech management stays on.

"The objective is not here to walk in and cut costs, the objective is to make this one of the best companies in the world in health care," he said. "I have a strong conviction that most if not all senior management will stay on."

(Additional reporting by Katie Reid and Jason Rhodes, and Ben Hirschler in London; Editing by Andrew Callus and Elaine Hardcastle)