ROCHE, THE Swiss drugmaker, yesterday described its $5.7 billion hostile offer for Illumina as “full and fair” and said it had no plans to raise its bid for the US diagnostics company.
But investors and analysts, while broadly supportive, pushed Roche’s shares down amid fears the group would be embroiled in a lengthy bid battle and ultimately overpay. On Tuesday, Illumina shares closed 3.79 per cent higher at $37.69 and by Wednesday morning in New York they were up 43.3 per cent to $54 a share.
Roche has offered $44.50 a share in cash for Illumina, about a 64 per cent premium to the company’s share price in mid-December. Illumina’s shares had already risen by about 40 per cent since early December, partly on takeover rumours. Illumina rejected an initial $40 a share offer from Roche earlier this month.
Severin Schwan, chief executive and a former head of diagnostics, the second of Roche’s two divisions alongside pharmaceuticals, likened the offer to his 2007 bid for Ventana, another highly entrepreneurial and fast-growing US diagnostics company.
Although now successfully integrated into Roche, negotiations over Ventana dragged on for months, with the Swiss group ultimately raising its already high offer. In a conference call, Mr Schwan said he still hoped for a recommended offer. But he added Roche would, if necessary, table proposals at Illumina’s shareholders’ meeting, expected in May, to address shareholders directly, including proposing alternative directors.
So far, Roche, which initiated contacts with Illumina in December, has built only a minimal stake in the US company. Illumina, founded in 1998, is not believed to have any dominant shareholders.
Buying Illumina will accelerate Roche’s efforts to strengthen its presence in genetics and gene sequencing. A number of companies including Roche are seeking to offer “personalised medicine”, selling both drugs and “companion” diagnostics to ensure they are accurately “targeted” to subgroups of patients who will benefit. But many have struggled to develop both the treatment and the accompanying diagnostic in-house. – Copyright The Financial Times Limited 2012
