Illumina is adopting a 'poison pill' in a bid to block Roche’s $5.7 billion hostile takeover offer.
The US company, which develops tools and systems for the analysis of genetic variation and function, has announced a stockholder rights agreement, which is "designed to deter coercive or otherwise unfair takeover tactics". Earlier this week, the Swiss major, having been rebuffed by Illumina's board a number of times over the last month, made an unsolicited offer of $44.50 a share in cash, which represents a premium of about 18% to Illumina's stock price on January 24.
The rights agreement means that Illumina shareholders can buy $550 in common shares for just $275 if a bidder acquires 15% of the company’s stock. The effect of this would be make Illumina more expensive to acquire.
Jay Flatley, Illumina’s chief executive, says the board has taken this action "to ensure that our stockholders receive fair treatment and protection in connection with any proposal or offer to acquire the company, including the proposal announced by Roche". It also gives stockholders "adequate time to properly assess any such proposal or offer without undue pressure".
In response to the shareholder rights plan, Roche said that "although not unexpected", the firm is "disappointed that the Illumina board of directors has been unwilling to participate in substantive discussions". It said that the offer "represents a substantial premium and Roche is confident that Illumina shareholders will see the value of the offer".