Roche’s Updated Bid Rejected by Illumina

Roche LogoIllumina’s board of directors unanimously rejected Roche’s revived takeover bid yesterday, describing it as “opportunistic”.

Last week, the Swiss major improved their offer by 15% to $51.00 per share, valuing Illumina at around $6.60 billion.  However, after “careful review and consideration together with its financial and legal advisors”, Illumina’s board have not been persuaded.

In a letter to Roche’s chairman, Franz Humer, Illumina’s chief executive, Jay Flatley, declared that the bid “dramatically undervalues Illumina and does not adequately reflect [its] singular position in an industry poised for extraordinary growth.”

Flatley also referred to Roche’s presentations to their investors, which claimed that Illumina “has strong revenue generation, strong profit generation, strong cash generation and a very good track record of delivering continual upgrades in technology to the marketplace.”

Mr Flatley noted that Illumina’s board agrees with Roche’s positive analysis, and that the board remains “confident in the ability of Illumina’s management team to continue executing against our opportunities.”  He adds that Roche “has made an opportunistic offer, fully aware that even the revised offer does not reflect the intrinsic strength or future prospects” of Illumina.

Mr Flatley concludes that “Illumina’s strategic plan, executed independently, will create stockholder value significantly greater than what you have proposed.”

Roche Disappointed

Roche’s chief executive, Severin Schwan, commented that his company is disappointed that Illumina’s board has rejected the updated bid “and continues to rebuff our attempts to engage in substantive discussions.”  He claimed that the offer is “highly attractive”, adding that he believes that management at Illumina “are determined to preserve their positions rather than maximise shareholder value.”

He concluded by mentioning that Roche believes “that Illumina shareholders will see the substantial value” in the improved proposition, and “conclude that there is absolutely no justification for Illumina’s current directors’ refusal to begin discussions with Roche and vote their shares for the Roche director nominees” at the annual meeting on the 18th April 2012.

After the news, shares in Roche today were virtually unchanged. Illumina’s shares closed at $51.37 in New York on Monday, down 2.36%.


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