Roche repeats offer of better deal for Illumina

SWISS PHARMA group Roche has sent its third letter to Illumina shareholders, repeating its readiness to improve its takeover offer, as strong diagnostic sales in the first quarter reflected the group’s growth potential.

Chief executive Severin Schwan yesterday repeated Roche’s $51 (€38.7) a share offer, valuing the US gene-sequencing group at $6.7 billion (€5.08 billion), saying the price was “more than adequate”.

However he confirmed Roche might go higher if allowed due diligence and claimed not to be perturbed that the company had so far been tendered only a minimum number of Illumina shares.

“It is typical that shares are tendered only at a very late stage,” he said in a conference call, noting that a large proportion of Illumina’s stock was held by a relatively small number of investors.

“Illumina has to date not provided any quantitative support for their aggressive growth assumptions. We believe that their long-term growth expectations are unrealistic,” he said.

Illumina has consistently rejected Roche’s offers as too low and, most recently, cited reports by three US proxy advisory groups supporting its stance.

Mr Schwan declined to discuss how Roche might react if its alternative slate of directors, proposed for Illumina’s shareholders’ meeting next week, were not approved. Illumina’s general meeting is due in New York on April 18th, as analysts remain mixed on whether the Swiss group might come out with a surprise or walk away if unsuccessful.

The comments came as Roche – the first of the big pharma companies to report figures – said that first-quarter sales fell 1 per cent to 11 billion Swiss francs (€9.15 billion), hit by restricted health spending and the strength of the franc. In constant currency terms sales rose 2 per cent in the period, in line with market expectations.

While sales in the core pharmaceuticals division fell 1 per cent to SFr8.6 billion (and rose 2 per cent in constant currency terms), sales in diagnostics, Roche’s smaller second division into which Illumina would be integrated, remained stable at SFr2.4 billion, up 4 per cent. – Copyright The Financial Times Limited 2012