Roche increases bid for Illumina to $6.7bn

ROCHE HAS raised its bid for Illumina to $6.7 billion (€5.02bn) after talks with the US gene sequencing company’s shareholders in an effort to force a reluctant board to negotiate a sale.

The Swiss drug-maker said yesterday it was now offering $51 per share, up 15 per cent from an initial $44.50, as it seeks to garner investor support for a deal ahead of Illumina’s annual general meeting next month.

Roche’s original offer – made in January – was dismissed as too low by Illumina, which has itself adopted a so-called poison pill, a defence strategy commonly used by companies to fend off hostile takeovers.

Roche chairman Franz Humer said in a letter to Illumina chief executive Jay Flatley that his company had decided to increase its offer after “productive discussions” with shareholders and after observing the market reaction to its original bid.

“If you continue to decline to negotiate with us we will have no choice but to continue our effort to effect a transaction unilaterally,” he said. “However, I strongly hope that you will either agree to commence discussions with us now or remove all obstacles so that your shareholders can make their own determinations about the adequacy of our increased offer.”

Roche, the world’s largest maker of cancer drugs, has been forging ahead in developing targeted therapies. 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.

The Swiss company said the $6.7 billion valuation was more than 15 per cent higher than the original offer, valued at $5.7 billion, because it took into account a larger number of outstanding options that would be triggered at the higher price.

Illumina said it would “thoroughly review” Roche’s revised offer and make a recommendation in due course.

Birgit Kulhoff, vice-president of investment research at Zurich-based private bank Rahn Bodmer said: “I do not expect the Illumina management to see the offer as sufficient. Looking at historical prices they would likely expect an offer closer to $70. I do not expect Roche to arrive at that level.” – (Reuters)