Roche has made an unsolicited offer to acquire Illumina, a developer of life science tools and systems for the analysis of genetic variation and function, worth around $5.70 billion.
The Swiss major is offering $44.50 a share in cash, which represents a premium of about 18% to Illumina's stock price at the close on Tuesday. It is 64% higher than the share price on December 21 last year, the day before market rumours about a potential transaction drove Illumina’s stock price up.
However the diagnostics group has not gone all weak at the knee over Roche's offer. Indeed the Swiss major has made "multiple efforts to engage with Illumina" but the latter "has been unwilling to participate in substantive discussions".
It has been reported that Roche started off with an offer of $40.00 per share and the company has published a letter from chairman Franz Humer to Illumina chief executive Jay Flatley which reveals that the firms have been in talks for the last several weeks. However, the latter wrote a letter on January 18 confirming his board’s lack of interest in a transaction.
Roche has therefore decided to go public with its bid and chief executive Severin Schwan said "we expect that Illumina’s shareholders will welcome the opportunity to sell their shares at a significant premium to current market prices". He added that "it is our strong preference to enter into a negotiated transaction…and we remain willing to engage in a constructive dialogue with Illumina to jointly develop an optimal strategy for maximising the value of our combined business.”
Illumina has responded by saying its board of directors will "thoroughly review Roche’s proposal and make a recommendation to stockholders in due course". For the moment, it is advising shareholders to take no action.
A takeover of Illumina would be Roche's largest purchase since the $46.80 billion acquisition of Genentech in March 2009. In 2008, it went hostile to buy US diagnostics company Ventana Medical Systems for $3.40 billion, having originally bid $3.00 billion.