Roche extends bid for Illumina

Swiss drugmaker Roche has hiked its cash bid offer for US gene sequencing company Illumina by 15 per cent to over $6 billion in a bid to win over shareholders ahead of Illumina's annual general meeting next month.

Roche is now offering $51.00 per share, up from an initial bid of $44.50 per share, one it had considered "full and fair" but that was dismissed as too low by the target company, which has adopted a "poison pill".

"Based on our discussions with Illumina shareholders we have seen interest to accelerate the takeover process. As a result, we are increasing our offer price to $51.00 per share," Roche said in a statement today.

Illumina shares, which have broadly been trading around the $50 mark since the middle of February, closed at $49.88 last night.

Roche, the world's largest maker of cancer drugs, said it still wanted to enter discussions with Illumina, but that it would continue to pursue the deal unilaterally if management at the San-Diego based group refused to talk.

Analysts had expected Roche to raise its bid for Illumina, but the decision to do so now comes earlier than many had anticipated.

"It was certainly triggered by discussions with the biggest shareholders. The top seven hold 55 per cent so $51 is probably the consensus amongst them," said Kepler Capital Markets analyst Martin Voegtli who puts the new value of the deal at $6.5 billion.

"Now the pressure on the Illumina board and management is increasing and that's a big step towards speeding up this deal," Voegtli said, adding the transaction could be completed in the next two months.

Roche, which has already extended its initial offer twice for Illumina, has a history of success with hostile takeouts, as highlighted by the earlier buys of US diagnostic test-maker Ventana and US biotech group Genentech.

Roche has been forging ahead in developing targeted therapies and Illumina's technology would help it to progress further in this field as gene sequencing can help better identify which patients benefit from a given drug.

Greenhill & Co, LLC and Citigroup Global Markets are acting as financial advisors to Roche.

Reuters