Roche plans a tender offer for DNA co Illumina
Wednesday, January 25, 2012
Swiss drugmaker Roche said early Wednesday that it plans to offer shareholders $5.7 billion for DNA diagnostics company Illumina.
Roche Holding AG said the deal would accelerate routine clinical use of DNA testing. And it said that buying San Diego-based Illumina Inc. will strengthen Roche’s position in diagnostics because the companies’ technologies are complementary.
Roche’s planned tender offer of $44.50 per share would represent an 18 percent premium over Tuesday’s closing price of $37.69 for Illumina shares.
Roche said the offer price also is 64 percent higher than the last closing price before speculation surfaced in December that Roche was considering acquiring Illumina.
Roche, which has more than 80,000 employees and specializes in cancer diagnosis and diabetes management, said it has tried to negotiate a deal, but Illumina has declined to participate.
The deal will depend on a majority of Illumina shareholders tendering their stock.
Illumina representatives did not return calls for comment overnight. But the company released a statement acknowledging the unsolicited offer and advising shareholders not to respond until Illumina’s board issues a recommendation. Illumina said the board will thoroughly review Roche’s proposal.
Roche said it plans to nominate a slate of independent candidates for a majority of the seats on Illumina’s board of directors and to propose measures for shareholders to consider at their 2012 annual meeting.
Roche CEO Severin Schwan said Roche remains open to talking with Illumina and developing a joint strategy for the combined businesses.
If the buyout proceeds, Roche plans to move the headquarters for its applied science business to San Diego but maintain operations for the unit in Penzberg, Germany, where it’s now based.
Roche Chairman Franz Humer said in a letter to Illumina President and CEO Jay Flatley included in Roche’s statement that Roche hopes to retain Illumina’s managers and employees.
Illumina’s board confirmed last week that it wasn’t interested in negotiating a deal, according to Humer’s letter. It plans to announce its fourth-quarter results and hold a conference call with investors on Tuesday.
Illumina shares, which rose $1.38, or 3.8 percent, to close Tuesday at $37.69, didn’t change with the news. They had risen 2 cents soon after U.S. stock markets closed.