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Swiss drugmaker Roche Holding AG (ROG.VX) said Thursday it sealed a friendly deal with Genentech Inc. (DNA) to buy the 44% of the U.S. biotech company that it doesn't already own for around $46.8 billion, after raising the offer price to $95 a share.

Roche, based in Basel, said it expects the transaction to be accretive to earnings in the first year after closing. Roche already has the financing for the deal in place after it successfully placed a number of bond offerings in various currencies, raising nearly $40 billion in the process.

The agreement ends a nearly eight-month battle, in which Genentech repeatedly rejected Roche's offer.

Last Friday, Roche increased the offer price to $93 a share. The higher offer brought Genentech's independent board of directors to the table, with intense merger talks starting Saturday, Roche Chairman Franz Humer told reporters on a conference call Thursday.

The agreement finally reached is for a slightly higher price of $95 a share. Roche will amend its existing tender offer to reflect the increased price. The expiration date for the offer is March 25.

"We believe this is a fair offer for Genentech shareholders," said Charles Sanders, chairman of a special committee of independent Genentech board members in a statement. "We look forward to working with Roche to complete the transaction as expeditiously as possible."

Roche already once owned all of Genentech, when it had acquired the then-small U.S. biotech firm in 1990 for $2.1 billion. But the Swiss drugmaker reduced its stake to 56% in several steps a decade later.

The close collaboration with Genentech has been key to Roche's success in recent years, with all of the Swiss company's best-selling cancer drugs emerging from the California-based biotechnology company's lab.

The deal comes hard on the heels of Merck & Co's (MRK) $32.6 billion agreement to acquire Schering-Plough Corp. (SGP) and follows Pfizer Inc's (PFE) $68 billion January agreement to take over Wyeth (WYE).

The spike in drug sector M&A activity occurs when share prices of many pharmaceutical companies are being seen as undervalued by many players after the past year's sharp declines, despite the sector's often lauded defensive character in times of turmoil.

Still, with their strong cash-flows and balance sheets, top-rated drug companies find it easy to raise cash to finance deals. The sector's M&A activity also reflects the fact many big drugmakers face losing top moneyspinners as best-selling products lose patent protection.

Roche Thursday said its combination with Genentech should generate annual pre-tax cost synergies of approximately $750 million to $850 million. Synergies will be driven by reducing complexity and eliminating duplicative functions and processes in areas like late stage development, manufacturing, corporate administration and support functions, Roche said.

Roche Chairman Humer stressed that job cuts aren't in focus.

"The objective is not to walk in and cut jobs, the objective is to make one of the most effective companies in research," he told reporters.

The agreement comes around a month before publication of a key study on cancer dug Avastin, examining the drug's potential in treating early-stage colorectal cancer. If successful, sales of Avastin should soar, analysts say.

Chief executive Severin Schwan had told shareholders that driving the integration of the two companies will be Roche's main goal this year, after the merger has been completed.

Although analysts welcomed the deal, which is ending months of uncertainty, Roche shares traded lower because Rituxan, its best-selling drugs, had failed to meet the primary goal in a study that investigated its potential in treating lupus nephritis.

At 1015 GMT, Roche shares were down CHF4, or 2.8%, at CHF141.40, underperforming the European healthcare sector which was up 0.1%.

Company Web site: www.roche.com

-By Anita Greil, of Dow Jones Newswires; +41 43 443 8044; anita.greil@dowjones.com