Genetic test

25 January 2012 By Quentin Webb, Robert Cyran Follow @rob_cyran

Investors reckon Roche’s $5.7 bln hostile bid for the U.S. gene-sequencer will be improved. That’s sensible: the Swiss drugmaker has sweetened deals before, Illumina is a long-term strategic bet and counter-bidders could emerge. To win, Roche may have to swallow a super premium.

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Roche of Switzerland said on Jan. 25 that it planned to make a hostile, $5.7 billion cash bid for Illumina Inc., the Nasdaq-listed gene-sequencing company. Roche said it would take the $44.50-a-share offer directly to shareholders after “multiple efforts to engage with Illumina” were rebuffed.
Illumina said its board would review the proposal.
Roche said the offer represented “full and fair value” and that it had a “strong preference to enter into a negotiated transaction”. Roche will finance the bid from available cash and borrowings. It plans to nominate a slate of candidates for election to Illumina’s board at the company’s 2012 annual meeting.
Shares in Illumina leapt on Jan. 25. By 1452 GMT they had risen more than 39 percent to $52.40 a share.
Roche said the offer represented a 64 percent premium to Illumina’s share price on Dec. 21, the day before “market rumours” about a potential deal boosted the target’s stock. Illumina’s stock rose on Dec. 22 after Bloomberg published an interview with Roche Chief Executive Severin Schwan. The CEO told the newswire that Roche would consider a deal similar in size to its $3.4 billion purchase of Ventana Medical Systems in 2008.

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