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Jan 25, 2012

Roche Outlines $5.7B Bid to Buy Illumina for $44.5 Per Share in Cash

  • Roche is launching a $5.7 billion tender offer to buy Illumina for $44.5 per share in cash, after what it indicates are weeks of fruitless discussions with the latter’s board. The proposed per share price represents a 64% premium over Illumina’s stock value on December 21, 2011—the day before rumors about a potential deal between the firms started circulating—and a 43% premium over the one month historical average.

    Illumina’s response to what it calls the unsolicited acquisition bid is simply to confirm that it “will thoroughly review Roche’s proposal and make a recommendation to stockholders in due course.” Roche’s share price was hovering at 2.5–2.6% down by the time continental Europe sat down to its mid-morning coffee break. There appears to be no love lost between Illumina and Roche as far as discussions to date are concerned, and the lack of progress despite ongoing dialogue has left Roche apparently feeling like its been banging its head against a brick wall.

    As a result and in parallel with Roche publicly announcing its takeover plans and tender offer, chairman Franz B. Humer, Ph.D., has written to Jay Flatley, Illumina’s president and CEO. He states that Illumina’s apparent lack of interest in the proposed transaction and unwillingness to engage in any meaningful dialogue has pushed Roche to take its current course of action. The firm would still, however, continue to prefer a "negotiated transaction" with Illumina, Dr. Humer states.

    “It is our strong preference to enter into a negotiated transaction with Illumina, and we remain willing to engage in a constructive dialogue wtih Illumnina to jointly develop an optimal strategy for maximizing the value of our combined buinsess,” adds Severin Schwan, Roche Group CEO.

    As for the rationale behind the proposed takeover, Illumina would significantly strengthen Roche's position in sequencing and microarrays. Combining Illumina’s platforms with Roche’s own diagnostics expertise would  speed the development of sequencing-based routine clinical and companion  diagnostic tests. “Our ability to offer a total solution to researchers will help enable the discovery of complex new biomarkers improving drug discovery and the selection of patients most likely to respond to a targeted treatment,” remarks Daniel O’Day, COO at the Roche diagnostics division.

    Roche aims to combine its existing Roche Applied Science business with Illumina and move the combined business segment’s headquarters to San Diego while retaining operations at the current headquarters in Penzberg, Germany. 


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