Reuters reports that Roche’s ability to raise funding for the Genentech merger are in doubt.

“…In light of the current climate, a $45 billion loan looks large. It would have to be a combination of everything — Roche would have to print bonds to get the deal done,” a senior banker close to the deal said.”

“…I just don’t see that number being attainable any time soon…”

Current arb situation:

Deal price $89/sh

Current price of DNA: $72.2/sh

Arb ROI: 23.2% — looks tempting, but I am already in at $80.63 (see my portfolio). I think it is gonna drop a bunch more in the coming weeks as Roche struggles to shore up financing for the deal. If so, I might add more to my position.

The spread is opening up, but so is the risk.

We’ll see what Roche’s next press release says and go from there I guess. If I were to add more to my position now, I would wait until it drops even more, say below $60. But only if Roche keeps reiterating their intention to finalize the deal.