SWISS DRUGMAKER Roche said yesterday it would not extend a $6.8 billion hostile offer for genetic specialist Illumina as the US group’s shareholders blocked its move to appoint new directors.
Roche, which is now set to walk away from its takeover target, said an offer above $51.00 per share would not be in the interests of its own shareholders.
The tender offer for Illumina expires on Friday and Roche said it would not extend the bid as the US firm’s management had refused to engage in constructive dialogue. The decision is a victory for Illumina in its battle to stay independent, although some investors think Roche may wait in the wings for a fresh opportunity to pounce if the US company’s shares underperform.
The gene sequencing specialist, which branded itself “the Apple of the genomics business”, rejected Roche’s sweetened takeover offer and had repeatedly urged shareholders to vote against appointing Roche’s nominees to its board.
Roche, the world’s largest maker of cancer drugs, has been developing targeted therapies and Illumina’s technology would help it to progress further in this field as gene sequencing can better identify which patients benefit from a given drug. But there are also other approaches Roche can take, given its existing strong position in diagnostics. “Roche will continue to consider options and opportunities to develop further its portfolio of businesses in order to expand its diagnostics leadership position,” chief executive Severin Schwan said in a brief statement.
Roche’s decision not to extend its bid came as Illumina shareholders were meeting to vote on a Roche proposal for a slate of nominees for director seats, in a bid to win majority control of the board. Illumina shareholders backed all four of Illumina’s nominees to the board and rejected Roche’s proposal to increase the size of the board to 11 directors.
Shares in Illumina were trading down 4 per cent at $42.20 by 1530 GMT, below Roche’s initial offer of $44.50 per share, made when it launched the bid in January. Roche shares were up 1 per cent at 162.90 Swiss francs. Hedge fund investors and bankers had said they would expect Illumina’s shares to plunge to $38.42 standalone value if Roche walked away. – (Reuters)
