The board at US gene specialist Illumina has unanimously rejected Roche’s improved takeover bid, describing it as "opportunistic".
Last week, the Swiss major increased its offer by 15% to $51.00 per share, valuing Illumina at about $6.60 billion. However, after "careful review and consideration together with its financial and legal advisors", the latter firm has not been swayed.
In a letter to Franz Humer, Roche’s chairman, Jay Flatley, Illumina’s chief executive, said the offer “dramatically undervalues Illumina and does not adequately reflect [its] singular position in an industry poised for extraordinary growth”. He made reference to Roche’s own presentations to investors, which claimed that Illumina “has strong revenue generation, strong profit generation, strong cash generation and a very good track record of delivering continual upgrades in technology to the marketplace".
Mr Flatley said that "we agree, and our board remains confident in the ability of Illumina’s management team to continue executing against our opportunities". He adds that the Basel-headquartered firm "has made an opportunistic offer, fully aware that even the revised offer does not reflect the intrinsic strength or future prospects" of the firm.
He concludes that "Illumina’s strategic plan, executed independently, will create stockholder value significantly greater than what you have proposed". The rejection of the Roche bid means that Illumina's annual meeting, to be held on April 18, is likely to be a lively affair, given that Roche is trying to get its own slate of directors elected to the board.
Roche chief executive Severin Schwan said his firm is disappointed that Illumina’s board has rejected the offer "and continues to rebuff our attempts to engage in substantive discussions”. He claimed that the bid is "highly attractive", adding that management at the US group "are determined to preserve their positions rather than maximise shareholder value".
He concluded by saying "we expect that Illumina shareholders will see the substantial value in our increased offer, conclude that there is absolutely no justification for Illumina’s current directors’ refusal to begin discussions with Roche and vote their shares for the Roche director nominees".