Buoyed by the backing of two firms that advise institutional investors on proxy voting matters, Illumina has sent a fourth letter to stockholders, urging them to reject Roche's $51.00 per share offer, valuing the US gene specialist at about $6.60 billion.

The latest letter from Illumina's board, which comes ahead of the company's annual general meeting on April 18, highlights "supportive reports issued by two of the nation’s leading proxy advisor firms – Institutional Shareholder Services (ISS) and Egan-Jones – which recommended that their clients back rejection of the Roche offer. It cites the ISS report which claims that $51.00 "does not provide meaningful compensation for the potentially enormous long-term opportunity shareholders would forego by selling at this point".

The Illumina board, which rejected that offer and an earlier $44.50 per share bid, says to stockholders that "Roche’s effort to have its nominees elected in support of that grossly inadequate offer is a blatant attempt to steal value that belongs to you". The management adds that "there has never been a better time to be an Illumina stockholder [as] we are the clear innovation and market leader in life science tools and integrated systems for the analysis of genetic variation and function at a time when our industry as a whole – and Illumina in particular – has the potential to experience extraordinary growth".

Unnecessary truncation of value - ISS

The firm quotes ISS as saying that "with the lack of serious competition in the near future, and the vast potential for sequencing that is already starting to appear, the board should rightfully be concerned about unnecessary truncation of value by selling the company at too low a valuation of its future". The advisor goes on to say the decision to bring the AGM forward by three weeks "suggests both an openness to shareholders' interests, and confidence in the integrity of the board’s own position on the value being offered".

Roche chief executive Severin Schwan said that "we are disappointed that ISS has recommended that Illumina shareholders vote against our director nominees". However he added that the latter's report noted that "Roche would seem to be an excellent partner for Illumina as the sequencing industry grows more intertwined with new drug development".

Roche 'willing to consider additional value'

Dr Schwan continued by saying that "we respectfully challenge ISS’ assertion that our current ‘bid does not provide a compelling starting point for negotiations'." The Swiss major "firmly believes that our present offer is more than adequate to serve as a basis for negotiation [and] we remain willing to consider additional value if given the opportunity to enter discussions and perform due diligence".