Tags: roche | illumina | drug | M&A

Roche Signals Willingness to Raise Bid for Illumina

Wednesday, 11 April 2012 08:09 PM

Roche Holding AG indicated it is willing to raise a $51-a-share bid for Illumina Inc., calling its current offer a “more than reasonable starting point for negotiations” in a letter to Illumina shareholders.

Investors in the genome-sequencing company “should have the right to choose between Roche’s $51 all-cash offer, plus any increase to that offer that negotiations between Roche and Illumina may produce, and an uncertain future amid increasing headwinds for Illumina and the broader sequencing sector,” Roche Chief Executive Officer Severin Schwan wrote Wednesday.

“That kind of says you could get $51 and then some,” Les Funtleyder, a fund manager who helps oversee $100 million at Miller Tabak & Co., including Illumina shares, said in a telephone interview. “It’s at least a signal that Roche would be willing to increase its offer.”

The Swiss drugmaker said last week it is willing to study “additional value” in its proposal to San Diego-based Illumina after a proxy-advisory firm recommended the target company’s shareholders reject the $6.7 billion offer. Roche raised its bid on March 29, from an initial offer of $44.50 in January. Illumina rejected both as inadequate and refused to negotiate.

Roche, the world’s biggest maker of cancer medicines, has proposed board nominees for Illumina, which has its annual meeting scheduled for April 18. Illumina rose less than 1 percent yesterday to close at $52.57 in New York trading.

Spokesmen for Illumina declined to comment on Roche’s letter.

Future Prospects

Roche said in its letter that Illumina’s future as an independent company is “far from certain,” disputing a comparison Illumina cited recently between itself and Apple Inc., the world’s most valuable company and the maker of the iPhone and iPad.

“Apple’s revolutionary products were huge and instantaneous commercial successes, appealing to a seemingly endless consumer base around the world,” Schwan said in the letter. “Illumina’s products on the other hand, although ‘revered by genomics researchers around the world,’ serve a much smaller and highly regulated market.”

Roche cited its size, industry knowledge and sales force as the reasons the Basel, Switzerland-based company would be able to increase Illumina’s business.

“It’s interesting that Apple’s become the benchmark by which to measure technological progress now,” Funtleyder said. “Illumina may not be Apple, but it is currently the market leader in genomics.”

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Wednesday, 11 April 2012 08:09 PM
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